When you begin your home search, keep federally backed loan options in mind. The government’s agencies support several programs that can offer unique and exciting mortgage terms to help you move into the home of your dreams. The Federal Housing Administration’s loans, for example, come with relaxed credit score and down payment requirements, compared to a conventional loan. The program may prove especially helpful if you’re buying a first house or have other limits on your spending.
Instead of going directly from the government to you, FHA loans are private mortgages insured by the federal agency. Therefore, you can apply for an FHA mortgage through your First Centennial Mortgage loan officer, like any other loan. Consider the following facts that can help you determine whether the FHA’s program is right for your needs.
The down payment
How much can you afford to pay upfront for your mortgage? If you don’t have the cash on hand to make a large down payment, an FHA loan may be the right option for you. FHA loans allow down payments as low as 3.5%
Income and credit requirements
Taking out any kind of home loan means checking your income and credit score against required amounts. While this process is the same for receiving an FHA-insured loan, the targets are typically more relaxed and flexible, representing the government’s efforts to help more home buyers enter the market.
Some of the costs of buying a new home don’t come from paying off the principal of the loan or even paying interest. There are some one-time expenses associated with a home purchase that you have to figure into your math when you’re close to coming to an agreement with a seller.
While an FHA loan is one prominent kind of government-backed mortgage, other options on the market may suit your personal circumstances more precisely. For example, if the house of your dreams is in a rural area, you may be eligible for a special program from the U.S. Department of Agriculture that encourages people to move to small towns through similar features to FHA loans. If you’re a veteran or active member of the military, the Department of Veterans Affairs could have the best loan program for you.
If you think your financial situation won’t support a mortgage, it may be time to take a second look; government-insured loan programs can represent a path to homeownership. Contact your First Centennial Mortgage Loan Officer to find out which mortgage option is best for you.
Do you have more questions? Contact the loan officer who shared this blog post or send us a message.