One of the most popular loans for first time home buyers is the FHA Loan from the Federal Housing Authority. It’s an awesome loan program that has helped thousands of people buy their first new home.
FHA has a lot of different parts that help first time home buyers. Getting financed for your first home and saving a 20% down payment just isn’t feasible for many people. Here are the reasons why FHA Loans have been such a success for homeowners.
FHA makes it much easier to make a down payment, only requiring 3.5% down. It can also come from gifted funds, which can be tricky (check our guide!). Your 401K can also be used as an asset for your down payment with FHA.
You don’t need to have a credit score in the high 750’s to get an FHA Loan. You can move in with a 640. We wish more people knew this, as it could save them time that they were spending building their credit score. While having a higher credit score can get you a lower interest rate, you can get your home now and stop throwing money away on rent.
Debt to Income Ratio
They also allow a higher debt-to-income ratio than a conventional loan. FHA Lenders actually allow up to a 55% debt-to-income ratio percentage. Conventional mortgages only allow 45%. This lets more people move into their dream homes.
30 year fixed rates for mortgages are also coming with lower interest rates for FHA than conventional. Part of this is because FHA requires a PMI payment every month. That’s Private Mortgage Insurance. It’s an insurance payment that you make to the lender to help guarantee them against losses. That way, they can also offer you a lower interest rate.
All of these help make FHA one of the best loans for new home buyers. Take advantage of lower mortgage rates and FHA to buy a new home and save money. Call us in St. Louis at (314) 781-9700, Chicago at (773) 770-4727, Indianapolis at (317) 550-1515 or Nashville at (615) 810-8555. You can always apply online at www.thehomeloanexpert.com, and we’re also open on Saturdays to better serve you. Don’t forget to follow @TheHomeLoanEx on Twitter for breaking mortgage news and knowledge. Nobody gets lower rates on better loans than The Home Loan Expert, Ryan Kelley, why go anywhere else?