Unlike most traditional home loans, the FHA loan is a mortgage that’s protected and insured by the government under the Federal Housing Administration. This protection offers several unique advantages to potential home buyers, particularly first-timers looking for an easy entry into the real estate market. To weigh your options, Movement Mortgage in North Haven, CT, offers more insight on FHA loan benefits and what borrowers need to know.
Simple Guide to FHA Loans
What Are the Benefits of FHA Loans?
As an insured mortgage, lenders will still get paid even if the buyer defaults. As a result, even individuals with poor credit histories may qualify. Borrowers will also benefit from the loan’s low down payment requirement, which falls between 3% and 10%.
Do I Qualify for an FHA Loan?
Currently, applicants must have a credit score of 580 or higher to be considered for approval. However, if the loan-to-value ratio of the home is 90% or less—due to a higher down payment—lower credit scores may be considered. In addition, you will need to prove that you have a regular source of income to cover the debts associated with the home purchase.
How Much Can I Borrow?
The total amount you can be approved for will ultimately depend on the local housing market. For example, those in high-cost markets can qualify for up to $635,500. By contrast, buyers in average or low markets may only be approved for $271,050.
What Is Mortgage Insurance & Why Do FHA Loans Require It?
Mortgage insurance is an amount you pay upfront, at closing, and in monthly installments to protect the lender against a loss. This payment is directed to the Federal Housing Administration and is used if you default. To simplify insurance coverage, your lender can roll the premium costs into your monthly loan payment.
Where Can I Apply for an FHA Loan?
To start an application, consult a lender approved to dispense FHA loans. However, it’s important to understand that the terms and costs of your mortgage will vary depending on the lender you choose.
If you’re ready to buy a home in North Haven, CT, but are struggling to get past a low credit score and high down payment requirements, Movement Mortgage can help you explore the potential of an FHA loan. Dedicated to putting borrowers first, this committed team of loan officers will guide you through the application process and discover solutions to make your mortgage more affordable. To learn more about all the lending options, visit this financial provider online or call a trusted specialist at (203) 215-5133.