One of the most popular loans that are availed by most of the first time home buyers in the USA is the FHA or Federal Housing Administration home loan programs. FHA is basically a government agency which works under the U.S. Department of Housing and Urban Development that insures the first time home buyer loans. Its primary goal is to extend help to people who have a low income and have to borrow money for any sort of property ownership. Being a borrower, you are liable to make payments for the mortgage insurance in order to protect the interest of the lenders in the case of defaults.
Since these first time home buyer programs are insured by the FHA, you can get lucrative rates of interest rates for these types of loans. For further assistance and details, you must resort to a professional home loan specialist who can help you choose the best home mortgage program available at the best mortgage rates. Such companies can offer you home loans for high debt ratios, along with government loans, VA loans, and FHA loans for low credit scores.
Here, we have discussed a few questions that you must have before investing in the first home buyer loans. Take a look.
How much credit score is required to be eligible for an FHA first time home buyer loan?
This is one of the most popular home loan programs owing to its ability to be availed even at low credit scores. You can get the mortgage with just 3.5% down payment if you have a credit score of 580 or more. For those borrowers who have a credit score between 530 and 579, you can still avail this loan program but you have to pay a minimum of 10% down payment. And although people who have a credit score below 530 are not considered to be eligible for the FHA loans, there are some concession policies for people without a credit history such as the 'insufficient credit' or 'non-traditional credit history'.
Are there any restrictions on the down payment source?
For the FHA loans, there are no such compulsions on the source of the down payment. You can use all kinds of sources, right from your savings to other grants from any state or local down payment assistance program or a gift from any of your family members. This is definitely a major convenience that this kind of loan offers.
What about the closing costs?
FHA offers flexibility in terms of your closing costs too. FHA loan program allows a home seller, a builder, or the lender to share the burden of the borrower's closing costs, which include origination charges, title expenses, and reserve requirements, along with other charges. And you have the option to add these closing costs with your mortgage and make a request to the lender if he can increase the rate of interest on the loan.
Do I need to have an FHA approved lender?
Since FHA acts like an insurer and not the lender, you must seek the loan from an FHA approved lender instead of directly availing it from FHA. The rate of interests and program costs obviously vary between different lenders. You need to resort to a company which specializes in home loan programs to understand which lender will be best for your requirements and offers you the cheapest rates of interest.
So, without any further delay, if you need help with first time home buyer programs in Houston, you should take guidance from a reputed home loan specialist.
Author Bio: Joan Gallardo has been a Senior Loan Officer for 18+ years and here, discusses a few queries about the first time home buyers program in Houston. Follow his articles to know more about the home loans for high debt ratios or low credit scores.
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First time home buyer programs in Houston, Home loans for high debt ratios,