4 Crucial Things to Know before Applying for an FHA Loan 500 Credit Score
A first-time homebuyer? Looking for a way to fulfill your dream of homeownership? Short-of finance? An FHA loan can meet your needs effectively. Insured by the U.S. Federal Housing Administration and approved by lenders, this loan is the ideal choice for the ones who have not owned a home in the last three years.
Have a low credit score? Wondering how to get an FHA loan 500 credit score Texas? Well, there are several lenders, who will approve your loan with a low credit score. Want to know about this loan in detail? Read on –
- These loans have more lenient qualification requirements
It is easier to qualify for an FHA loan than for a traditional home loan program. FHA loan rules make allowances for borrowers who might not have an extensive credit history. Besides, with this loan, you can use gift money to make a down payment. The basic requirements for an FHA loan program are a credit score of 500 or higher, a debt-to-income ratio of 50% or less than that, a minimum 3.5% down payment, and the home must meet the minimum property requirements and be your primary residence.
- FHA loans need mortgage insurance
FHA mortgage insurance is mandatory for all FHA loans. Unlike the private mortgage insurance by conventional borrowers who come with less than a 20% down payment, this insurance can’t be canceled just because you gain sufficient equity. When you make a down payment that is lower than 10%, FHA mortgage insurance lasts for the life of the loan. When you come with a 10% or more down payment, you will need to pay the insurance for 11 years.
- You can buy different types of homes
FHA loans are not just for single-family homes. Guidelines for buying FHA-approved condos are broadened nowadays. You can use this loan to buy a duplex, multifamily home, or manufactured home. Irrespective of the type of house you want to buy, in most cases, it has to be your primary residence. For instance, if you use an FHA loan to buy a multi-unit home, you need to live in one of the units. You can’t use this loan for investment properties.
- The loan term s may vary by lender
While the FHA sets minimum requirements, individual FHA lenders can have stricter standards. For instance, a mortgage lender might set their minimum credit score for an FHA loan at 580 rather than 500. Lenders set their own rates, as well as terms. So, it is a good idea to shop around and compare loan offers.
So, you have a general idea about FHA loan programs. Would you like to know more about this loan? Ask an FHA-approved lender and then opt for the loan today!
