Are you looking for a loan requiring a lower down payment or one with less stringent requirements? An FHA loan may be perfect for your needs. These mortgages are backed by the Federal Housing Administration, and they’re also bundled with mortgage insurance. Combined, these features make them a lower risk for lenders, which means it’s much easier for potential homebuyers to qualify.
FHA loans are one of the very best options for buyers with low credit scores. Financing is available even for borrowers with scores in the 500s, though you may be expected to put down a larger down payment and may face higher interest rates. Typically, lenders like to see scores of at least 640, but at Midland Mortgage Corporation, we have a vast network of financing partners who can often find solutions for borrowers with special circumstances resulting in credit scores below the 500 mark.
FHA loans are also well known for accepting as little as 3.5% of the purchase price for a down payment. These monies can also be donated by a family member or friend or a community grant, like those available through HUD’s homeowner programs. Your mortgage counselor will help you access all of the resources available to you. Borrowers with scores from 500 to 579 will likely need to put down at least 10 percent.
Another attractive feature of FHA loans is the lender’s ability to pay a portion of your closing costs. While sellers and home builders are the first place most buyers go when they need help with closing expenses, like appraisals and title inspections, if you don’t mind paying slightly higher interest rates, you can ask for these types of extras when securing your mortgage.
Borrowers can secure up to $35,000 for upgrades, repairs and renovations along with their mortgage as part of a 203(k) loan. This FHA-backed product bases lending limits on the perceived value of the home post-repair, giving you more leeway and a larger selection of potential homes to choose from.
FHA loans provide a wealth of options, including fixed rate mortgages. Learn more today.