3 Things to Know About FHA Mortgage Loans
An FHA mortgage loan is often a great deal for first-time homebuyers who are looking for the best possible arrangement for your mortgage. The FHA loan is also appealing to those who have less than desirable credit. FHA loans are loans sponsored by the Federal Housing Administration.
What An FHA Mortgage Loan Is
An FHA mortgage is a mortgage thats insured by the Federal Housing Administration. FHA mortgage loans allow those who qualify to receive much lower interest rates than traditional loans. Your FHA mortgage is insured by the government, so you are much less of a risk for lenders. Therefore, you can get a lower interest rate.
How You Qualify
Your lender will help you apply for an FHA loan. You will apply through the Federal Housing Administration, which will analyze your credit. Theyll want you to have at least one year of you making credit payments on time. Theyll also look at how much debt you have and compare that with how much income you bring in, as well as look at how well youve paid your rent or previous mortgages on time.
Less Than Perfect Credit
If you have less-than-stellar credit, you can still qualify for an FHA loan. One of the great things about the FHA is that they will listen to the reasons you have as to why your credit isnt as good as it could be. If you have valid reasons for your financial woes, they will consider these explanations before they make a decision.
FHA Insurance
If you buy your home using a loan sponsored by the FHA, you will have to purchase FHA insurance on your mortgage. The insurance amount youll pay will be equal to 1.5 percent of the amount you pay at the time of your closing. FHA insurance can be included in your monthly mortgage premium.
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