The Top 3 FHA Questions That We Get Every Week…
One of the most popular loans in the Southern Indiana Mortgage Marketplace today is the FHA loan. This mortgage product is very popular because of its low down payment option, flexible guidelines, and low credit score requirements. CLICK HERE TO SEE IF YOU QUALIFY FOR AN FHA LOAN
1.) How much down payment is required on an FHA Loan? This is one of the most important questions that our clients ask us as they are trying to figure out a price range for a home that they qualify for. The good news is that FHA only requires a 3.5% down payment in most instances. For example:
$100,000 Home Purchase = $3,500 Down Payment
$200,000 Home Purchase = $7,000 Down Payment
$275,000 Home Purchase = $9,625 Down Payment
From a down payment standpoint FHA is a great option with compared with the traditional Fannie Mae/Conventional loan that many people are used to hearing about, especially since many people think that this program requires 20% down payment. Don’t let that scare you, FHA is a great option if you are on a limited budget.
2.) What Credit Score Do I Need For FHA? As you probably know by now, credit scores are used in almost every area of our financial lives these days. From buying a home to buying insurance, your credit rating is going to be a HUGE determining factor in what you qualify for. The nice thing about FHA is that it will allow for some very low credit scores. In fact, we allow a borrowers credit score to be a 580 in some situations. Keep in mind that just because you have a 580 credit score doesn’t mean that you automatically qualify for the program though. With your credit scores on the lower end of the spectrum FHA is going to want you to have some assets like a little money in your checking/savings account or a 401k with a little money in it. If you are unsure of your credit score we can help you with that. Complete the home buyer quiz to the right of this article and we will reach out to you to discuss your current credit options and to let you know if you can qualify to buy a home soon. CLICK HERE TO SEE IF YOU QUALIFY FOR AN FHA LOAN
3.) What Are FHA Interest Rates? Another popular FHA question that we get is regarding interest rates. Obviously, interest rates are important as it determines your overall monthly mortgage payment with an FHA loan. Many people think that the interest rate/APR is higher on an FHA loan than it is on a conventional loan but that isn’t necessarily the case. Oftentimes your interest rate will be lower than a conventional loan, especially if your credit scores are in the mid to low 600’s. You may wonder why this is the case? The reason is that an FHA loan is more secure for a lender because it requires Private Mortgage Insurance on all of it’s loans. This means, if you ever default on the loan then the PMI will reimburse the lender for any loss that they may incur for approving a loan with a less than 20% down payment.
If you have more fha questions about a Southern Indiana Mortgage we would be happy to help. Feel free to give us a call at the number below or complete our home buyer quiz and we will contact you to discuss any questions and the options that you may have. Happy House Hunting!
Nathan Soliday, NMLS #166402
Success Mortgage Partners, NMLS #130562
190 W Becks Mill Road, Suite K
Salem, IN 47167