A Few Things to Know About FHA Loans

If you are interested in an FHA loan, you are not alone. But before you can apply for and take advantage of this type of loan, there are a few things you need to know.
Here is how Zillow defines an FHA loan:

“An FHA loan is a mortgage loan that is insured by the Federal Housing Administration (FHA). Nowadays, FHA loans are very popular, especially with first-time home buyers because the requirements are less strict than conventional loans.”

Of course, there is more to getting started than simply knowing the basics of an FHA loan. Here are a few other things you must keep in mind:

•    You can qualify for an FHA loan with a down payment as small as 3.5 percent.
•    You do not need excellent credit in order to qualify. With a score of 580 or better, you are in position to be approved.
•    Consumers who have a credit score between 500 and 579 can also qualify, as long as they have a down payment of 10 percent or more.
•    Closing costs may be covered. With an FHA loan, home sellers, lenders, and builders are permitted to pay some or all of the closing costs. A lender that agrees to pay closing costs will typically charge a higher rate of interest.
•    You can only receive an FHA loan from an FHA-approved lender.

With these details in mind, you can better answer this question: is an FHA loan the right decision for you, the home you want to purchase, and your financial situation in general?

If you are still on the fence, contact an FHA-approved lender to ask more questions and to determine if you qualify.

Have you taken advantage of an FHA loan in the past? How did it work out for you? What did you like and dislike?