Most often, when someone is looking to buy a house, the common available options are fixed-rate mortgages and adjustable rate home loans. Despite being the more common choices people make when getting a home loan, for so many others, it makes the dream of finding a home much less obtainable. The unfortunate truth is that the amounts needed to be paid back per month on the home loan can be substantial and overwhelming, making the strategy of defaulting on the home loan very common. However, there are options for those wary of taking these kinds of loans through the Fair Housing Association, or FHA. Their FHA home loan is one of the best options available for low-income individuals or families looking into purchasing their first house or a new one.
The difference between the FHA loan and the conventional loan is that the former is supported by the United States government. Federal support for the loan means that qualification standards will be lower, since the point of the existence of this loan is to help out those who are otherwise unable to qualify for loans. It gives them a shot at going for the American dream. Since qualifications standards are lower, it makes it so much easier to get approved for the loan. Lenders of the FHA loan are also protected from potential defaulting situations, which often happens when the borrower can’t help it.
There is a lot to consider before taking the important step of accepting an FHA loan. Calling it an important step is not an understatement. Most likely, buying a house is the largest investment that a person will make, so it’s imperative that you make enough research and think about all the considerations. Here’s one: down payments still exist for the FHA loan. It won’t be as scary as the traditional down payment on a house, which demands from 10% to 25% of the house purchase price to be paid before the loan payments start pouring in. Otherwise, the FHA loan asks for a down payment that can potentially reach as low as 3.5% of the purchase price in comparison. You need to show your financial responsibility to qualify for a down payment as low as that, which is at the minimum of 580 for a credit score. If you don’t have a credit score of such caliber, it’s alright – you will just have to pay a down payment that is higher, but not quite at the double digits in amount.
An FHA loan will also allow closing costs to be merged with the loan itself, so if you don’t have a lot of cash in your bank, this kind of option can be extremely useful to you and make it that much more affordable. These kinds of options undoubtedly make it so much easier and affordable for most people, and this is where it gets as good as it gets. Down payments and closing costs will have to paid for, regardless. It’s possible to get gift funds from an individual donor or a third-party bank, but they reserve the right to write their own little rules about the money they are giving you to pay for those costs, otherwise known as lender overlays. So yes, it’s possible to have a zero down payment on your house, but keep in mind that the Fair Housing Association is not managing all the financial activity on your loan – they are just the ones insuring it. Once you realize that you can potentially be working with third-party factors that can have a slight impact on your loan, you will be more prepared.
The maximum amount you can get on your loan ranges up to $650,000 for a house or property. This is nowhere near what the FHA national floor is, which stands currently at $271,050. The variation of the maximum will depend state by state, and county by county. Phoenix, Arizona is one of those counties that will loan out at the maximum of the FHA national floor. This should give you an idea of how realistic you will need to be when it comes to choosing your new house, and you will certainly have to do some research looking into where you are living in the future, and whether your family is able to cover the rest of the costs if your house will not be totally covered by the FHA loan that is available in your area.
There is a large number of programs that are geared to helping first-time home buyers. For seniors, they can receive a reverse mortgage. Veterans or other military service men can apply for a VA home loan. FHA home loans also cover not just single-unit homes, but also 2-4 unit homes, which is especially helpful for very large families who are possibly needing to get a condo, or for those families who can only afford a mobile home but built on a permanent foundation.