FHA loans are often an ideal option for first-time home buyers.
If you have ever purchased a vehicle or gotten a loan where you needed someone to sign with you, you have an understanding of what it means to provide a lender with protection against default. In the case of FHA loans, this party is not an individual, but instead the FHA (Federal Housing Administration). It is not uncommon for first-time home buyers to utilize this valuable program as FHA loans are easier to qualify for and require a lower down payment than conventional loans.
At Mortgages by Scott, we can walk you through the process of understanding and applying for FHA loans, so you can purchase a home in the Huntersville, North Carolina area. If you are looking to put less down or have a lower credit score than is required by a conventional loan, FHA loans are a good option. It is important to note that, while the FHA guarantees the loan, that only protects the lender if you default. It does not release you from responsibility.
The criteria to qualify for FHA loans does change from time to time, but we can go over what they are at the time you are applying. For example, in 2021, borrowers needed a down payment of 3.5% of the purchase and a credit score of 580 or more. If your score is below that, you may still be able to qualify, but you’ll need a 10% down payment. The good news is that those funds can come from a variety of sources, including gifts from a family member, a grant, or your savings.
Regardless of which down payment percentage you need, a requirement of FHA loans is that you purchase mortgage insurance. We are happy to walk you through the other aspects of these loans so you can decide if this is the route you would like to take. Contact us today to schedule a consultation to learn more.