FHA Loans for the Dream of Homeownership
FHA loans are wonderful for would-be homeowners interested in a loan option with easy qualifying and low down payment requirements. These are a type of nonconventional loan, which is insured through a division of the federal government; in this case, the Federal Housing Administration (FHA). The loans are funded through FHA-approved private lenders, who are more willing to lend to a wider variety of clients because they know the FHA will reimburse their losses in the case of default. Here, we’ll talk about the basics, benefits, and requirements for FHA loans. When you want to know more, the mortgage professionals at Aaron McDaniel -Cherry Creek Mortgage can help you with a free quote and even offer preapproval in many cases. We work with clients in Keller, Denton County, Frisco, and Irving, Texas, so contact us today.
FHA Loan Basics
FHA loans are one of several types of nonconventional loans. Others include USDA loans and VA loans, and each is designed to help give potential borrowers get a better shot at getting approved for home financing. The FHA home loan program was developed in 1934 during the Great Depression, when people needed affordable mortgages. Today, they’re popular among all walks of life, especially first-time homebuyers and people with less-than-great credit scores.
FHA loans may be used for single or multi-unit homes, as well as certain approved condos and manufactured homes. The limit you can borrow with an FHA loan varies by county. In Collin, Denton and Dallas Counties, the limit is $386,400.
FHA Loan Benefits
FHA loan benefits include:
- As low as 3.5% required down payment with a 580 or higher credit score
- As low as 10% required down payment for a 500-579 credit score
- The ability to use gifts from others toward your down payment and closing costs
- No prepayment penalty
- They are assumable, which means someone else can take it over
- Certain FHA renovation loans can be used for repairs to a home
FHA Loan Approval
To get approved for an FHA loan, you’ll nee a credit score of at least 500 and a low to moderate debt-to-income ratio – usually less than 42% is preferred. You will need to show financial proof that you’re able to pay your mortgage payments and other monthly homeowners expenses, including mortgage insurance (MIP).
Get Started with an FHA Loan Today
Aaron McDaniel – Cherry Creek Mortgage has the local experience you need in a mortgage professional, backed by the power of several national lenders with competitive interest rates. We serve clients in Keller, Denton County, Frisco, and Irving. No matter where you are in the process of looking for and purchasing a home, we can help. Contact us today.