An fha mortgage is a mortgage insured by the Federal Housing Administration. Borrowers with FHA loans pay for mortgage insurance, which protects the lender from a loss if there is default on the loan. It is always a good idea to check out for fha mortgage calculator on the web to have an idea on how much it will cost you!
Why do people look for this type of loan?
Due to insurance, lenders offer fha mortgage with attractive interest rates and with qualifying requirements less demanding and more flexible than conventional loans. The FHA is an agency within the US Department of Housing and Urban Development (HUD).Minimum credit scores for fha mortgage depend on the type of loan the borrower needs. To get a mortgage with a down payment as low as 3.5%, the borrower needs a credit score of at least 580.People with credit scores between 500 and 579 should have an entry of at least 10%.People with credit scores below 500 are generally not eligible for fha mortgage.
The perfect option for those with different credit scores
The FHA will make concessions in certain circumstances for applicants who have what we call “nontraditional credit history or underperformance” if they meet the requirements; but to be sure if you qualify or not, you have to have the advice of a qualified mortgage broker.
For most borrowers, the fha mortgage requires an entry of only 3.5% of the purchase price of the home. By the end of 2014, Fannie Mae and Freddie Mac reduced entry to only 3%, but these loans have very limited availability.
Fha mortgage borrowers can use their own savings to give input. But there are other authorized sources of money, such as a gift from a family member. Subsidy from a state prepaid assistance program or local government are also accepted.
The FHA allows home sellers, builders and lenders to pay some of the borrower’s closing costs, such as inspection, credit report or title expense. For example, a builder may offer to pay closing costs as an incentive for the borrower to be able to buy a new home. You can always have an idea of how much this type of loan will cost you by checking out online fha mortgage calculator.
Is this the right loan for you?
Borrowers can compare loan estimates with competing lenders to find out which option makes the most sense. The fha mortgage is not a lender, but an “insurer.” Borrowers need to get their loan through a “lender” that is approved by the FHA. Not all FHA lenders offer the same rate of interest and costs; that is, searching is fundamental! Make sure you check afha mortgage calculator to have an idea of loan costs.
In fact, fha mortgage can be a real wonder in the life of a person who is dreaming about home ownership, but it is very important to seek out all the information available before making any decision. We are in a competitive market, so make your money’s worth.