People interested in buying FHA programs often face misconceptions and myths about the loans. If you also face the same thing, you should find out the truth. The FHA loans appeared in the wake of the Great Depression and have helped millions of people since. To maintain stability in the tumultuous housing market, the emergence of the Federal Housing Administration is noteworthy. The first FHA mortgage was introduced in 1934, and people with low income found their way back.
In 2021, the FHA government home loans bad credit in Texas is still a very much popular option. Because of the 3.5% down payment, first-time buyers can buy their dream home. Unfortunately, a few perceptions exist, and these pieces of misinformation can eliminate your chance of buying a home. Most importantly, you lose the chance of purchasing a house with an easy financing option.
For starters, contradicting popular beliefs, the Federal Housing Administration does not offer a loan. The FHA only insures the loan in case a borrower defaults. So, you get the money from the FHA-approved lenders. There are many other myths about FHA government loans; let’s take a look below.
Myth #1: FHA loans are for credit-challenged people
The mortgage has forgiving guidelines in terms of credit scores, but this is not the end of the story. The mortgage comes with a competitive rate in comparison to other contemporary loans. When conventional loans are clearly not for damaged credit, the FHA loans offer the much-required help. FHA-approved lenders usually set the minimum benchmark as 580. But this does not mean every person with poor credit (around 590) applies for the program. Numerous borrowers with more than 620 also apply for FHA loans. So, the FHA loans are not only for credit-challenged first-time buyers but also for all.
Myth #2: FHA government loans have high rates
Many borrowers rear a misconception that the FHA mortgages can burn a hole in your pocket. It is always difficult to find the source of such myths, but there can be one. Loan rates go down if you have high credit scores. However, you do not need to worry about this here. The FHA offers a layer of security if borrowers default on the loans. In case you fail to pay back the home loan, the Federal Housing Administration can reimburse the private lender. For this very reason, the FHA mortgage brokers make sure interest rates remain low. Believe it or not, you can find FHA loans to be lower than traditional programs. You can expect to find a 30-year fixed-rate loan at less than 4%.
Another myth that goes around: you cannot get an FHA loan with a history of bankruptcy. There may be a waiting period, but a mortgage program is still possible. You may have to wait for a few years, but this does not put an end to your dreams. So, educate yourself and look for an experienced FHA lender. Get started now!