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Benefits of the FHA Mortgage Loan Program

Benefits of the FHA Mortgage Loan Program

If you plan to buy your first home, don’t overlook the benefits of an FHA loan. The FHA mortgage loan program allows individuals to obtain a home loan backed by the federal government. This does not mean the government funds the loan, but it does provide a level of insurance that safeguards the investment. As a result, it is a less risky loan for mortgage lenders to take on. That creates several key opportunities for homeowners to save money.

What Does an FHA Loan Offer?

The benefits of an FHA loan include:

  • Low down payment requirements. You may pay as little as 3.5% down on the loan, with some people qualifying for a no-down payment loan. Comparatively, traditional mortgages can require up to 20% down to buy a home.

  • Lower credit scores may still allow borrowers to secure a loan. This includes for less-than-positive credit reports as well as inexperience. In some cases, borrowers who have a credit score of 500 may qualify.

  • Closing costs are reduced in many cases, lowering the amount you pay to secure the loan.

Because these loans have federal backing to protect the lender, lenders can offer better rates. Generally, you will see lower interest rates and better overall term options on FHA loans than on traditional loans. And, a homebuyer may be able to assume the loan later if you decide to move, which can be a nice selling feature. For these reasons, if you have a plan to buy a home, you may want to consider the advantages of the FHA mortgage loan program.

Posted Jul 13, 2016 by Midland Mortgage Corporation