Have you given up on your dream of home ownership due to less than stellar credit or previous bankruptcy? Owning your own home might have been one of your biggest dreams. The good news is that an FHA loan just might help you buy your dream home, rather than kissing your dream of home-ownership goodbye.
If you think about it, in very few places do you feel as relaxed and comfortable with yourself and your surroundings than you do when you are in your own home. Millions of individuals choose to rent their home rather than to buy, but for some, it isn’t a choice to rent, but rather a necessity because of the inability to obtain a home loan.
There are several government home loan programs designed to help home buyers, one of which is the Federal Housing Administration loan, also known as the FHA loan. In 1934, the Federal Housing Administration was created to help individuals who could not afford to purchase their own home due to large down payment requirements, and high interest rates involved.
Specifically, FHA loans help you qualify for a home mortgage by offering:
- low down payments
- low closing costs
- easier credit qualification requirements.
The FHA loan program was created to assist individuals in purchasing a home by requiring a smaller portion to be paid as a down payment, and offering reduced interest rates. While the FHA itself doesn’t furnish financing, it provides government insurance for a variety of fixed and adjustable rate mortgages issued through FHA approved lenders.
Most FHA home loans only require the homeowner to pay an average of 3.5% of the home’s original purchase price as a down payment. This is a substantial reduction, considering that most lenders require a minimum of 20% down when securing a home loan.
In order to get an FHA home loan, you must meet certain financial criteria, as defined, to help low to moderate income families finance a home of their own, without having to worry about the large down payments many of them simply cannot afford.
Unlike with other loans, you’re allowed to get the entire down payment, as well as the closing costs, gifted to you. And family members are allowed to cosign on the loan to assist you in qualifying.”~ Marjo Diehl1
Even though lenders traditionally try to give good rates on FHA loans, it is always a good idea to do your due diligence and shop around for the best home loan. Once you have found a lender with a package you are happy with, it is time to begin the process of buyer risk assessment.
The lender will want to know everyone and everything you currently owe, so they can do a proper debt to income ratio assessment. This allows the lender to know whether you qualify for a loan, and also lets them know what kind of payment you can afford. Credit worthiness is also evaluated by checking into your credit history to see if you have any unpaid bills, or if you are late on any payments.
Did you know that many people make the switch from renter to homeowner and never pay a penny more than they did while renting?
If you are currently in the market for a home, you should definitely consider applying for an FHA loan. You may walk away with a smaller mortgage payment than you ever thought possible, and a nice new home to boot! Looking for more ways to save? Tap here for home energy saving tips.
*Acceptance Capital is an approved provider of FHA/HUD loan products. However, Acceptance Capital is not acting on behalf of or at the direction of FHA/HUD or the Federal Government.
1Schroeder, Alayna J.D.; Ilona Bray, J.D.; and Marcia Stewart. “Nolo’s Essential Guide to Buying Your First Home.” Nolo, December 2014, 5th Edition. Web. 16 April 2016.