If you are currently thinking about buying a house, there are many factors that you will need to consider in the process. One such factor, of course, is getting yourself a mortgage loan so you can successfully buy the home of your dreams. There are several types of mortgage loans available for you to choose from. An option that you may want to consider is an FHA (Federal Housing Administration) loan. Get to know some of the important facts about FHA mortgage loans. Then, you can decide whether or not this is a loan type that you want to apply for.
What Is an FHA Mortgage Loan?
An FHA mortgage loan is a loan that is backed by the Federal Housing Administration. What this means is that this federal government agency will insure the loan in case of borrower default. This helps both lenders and borrowers alike.
For the lender, having the insurance of the FHA behind the loan means that they will get paid back the money they lend a borrower, whether the borrower is able to fulfill that obligation or not. Borrowers get the benefit of being able to get a mortgage loan when they might not otherwise be able to do so. Lenders that might reject a borrower for any number of reasons will be more amenable to give out a loan when they know they have a way to get their money.
What Kind of Down Payment Do FHA Loans Require?
One of the biggest benefits of getting an FHA mortgage loan is the down payment that is required. Conventional mortgage loans may require up to 20 percent down payments on the home. However, an FHA loan typically only requires a 3.5 percent down payment. This makes buying a home a great deal more affordable for borrowers and gives people who would otherwise never be able to save up the 20 percent down payment get into a home that suits them.
What Credit Score Do You Need for an FHA Loan?
When it comes to getting a mortgage loan, the general consensus is that the higher the credit score, the better the lean candidate. However, when it comes to FHA loans, you do not have to have pristine credit to be able to get one. Borrowers can have credit scores as low as 500 and still get a mortgage loan if they meet all other qualifications. The caveat is that a borrower with a credit score lower than 580 or so may have to pay a 10 percent down payment rather than the more desirable 3.5 percent down payment.
Now that you know some of the important facts about FHA mortgages, you can get in contact with an FHA mortgage lending service right away to get your loan application process started as soon as possible.