There is a reason why FHA Loans are the most popular amongst borrowers looking to purchase homes. There are plenty of reasons that outline FHA Loan Benefits and in this article I will hopefully touch on a majority of these reasons and give you a good understanding on why an FHA Loan is a great loan program to get involved with. Gone are the days where FHA Loans were only for first-time home buyers or borrowers with questionable credit. These days I see people of all credit profiles obtain FHA Loans as their loan of choice and the reason is because of the FHA Loan Benefits.
If you may not already know one of the main FHA Loan Benefits are the relaxed credit score requirements needed in order for borrowers to obtain FHA Loans. If you are under the assumption that you will need a credit score within the 600’s to obtain an FHA Loan you are mistaken as the FHA Guidelines per the 4000.1 FHA Handbook will tell you otherwise. If your FICO credit score is 580+ you are able to obtain an FHA Loan with as little down payment as 3.5%. Also, if you have a FICO credit score between 500-579 you are also able to get a loan, however, you will need at least 10% down payment as well as other compensating factors in order to get this loan. This is a big difference than other loan programs because Conventional Loans require at least a 620 FICO score in order to proceed and even with a 620, you will be hard pressed to obtain a loan. If you are in the market for an FHA Loan and the lender you are working with is requiring a higher credit score than the scores mentioned here you are dealing with Lender Overlays. These are additional guidelines that lenders make you adhere to in addition to the minimum guidelines of a loan program. You can rest easy knowing that I, Nick Ferrante NMLS# 1110570 of Mortgage Scenarios, working with Fairway Independent Mortgage Corporation NMLS# 2289 only deal with lenders who can gets loans approved using the minimum guidelines.
Another of the FHA Loan Benefits is the low down payment amounts required in order to obtain your loan. As I previously mentioned, with a FICO credit score of at least 580 you will be eligible for a 3.5% down payment so on a purchase price of $200,000 you will only need to have $7,000 in order to obtain the home. If you fall into the 500-579 FICO credit score range you will need to have at least a 10% down payment for your FHA Loan.
In an effort to allow for FHA Loans to be obtainable and with minimal money out of pocket another of the FHA Loan Benefits is that of closing cost credits. Now according to FHA Loan Guidelines, borrowers are able to obtain up to 6% of the loan amount as a credit from the seller and put these funds towards their respective closing costs. In a lot of situations you may even have additional funds left-over after all closing costs are paid and you can use these funds to lower your interest rate. If this scenario isn’t completely clear to you, please reach out to me at 630-465-2656 as we can create a program for you where we can take advantage of all FHA Loan Benefits.
In closing, these are just a few of the FHA Loan Benefits and if you interested in hearing even more reasons as to why FHA Loans are a great loan for all home buyers, then you need to reach out today and we can get you started on the path to home ownership using FHA Loan Benefits. If you feel you already have the ability to get approved for an FHA Loan then please start your application process by clicking the link here.