Top Reasons To Choose an FHA Loan
When purchasing a home, you have many different lending options to choose from. In addition to traditional loans such as fixed-rate or adjustable-rate mortgages, more unconventional options such as FHA loans can also be advantageous in certain situations. FHA loans are backed by the US Federal Housing Administration and provide mortgage insurance on loans made by FHA-approved lenders. If you’re in the process of determining which loan option is right for you, take a look at these top reasons to choose an FHA loan.
Lower Down Payment Requirements
One of the main reasons to choose an FHA loan is that they have lower down payment requirements than traditional home loan options. Typical down payment requirements on FHA loans are as low as 3.5 percent of a home’s purchase price rather than the 20 percent required by some traditional lenders. As such, FHA loans can help make home ownership a reality for those who aren’t currently able to put up large down payments.
Lower Minimum Credit Score
In addition to lower down payment requirements, FHA loans also generally have lower credit score requirements than most other loans. Generally, conventional loans require a credit score of at least 620 to qualify. In some cases, however, borrowers can qualify for an FHA loan with a credit score as low as 580 with a 3.5 percent down payment. If borrowers are able to put up larger down payments of around 10 percent, they could even qualify with a FICO score of only 500.
Shorter Wait Time Following Negative Credit Events
Traditional loans typically require long wait times following major negative credit events. If you have a foreclosure or bankruptcy on your credit history, you will typically have to go through a waiting period of around seven years before being eligible for another conventional loan. In some cases, such significant negative events could completely disqualify you for certain loans altogether regardless of how much time has passed.
However, FHA loans require much shorter waiting periods following major negative credit events than conventional loans. If you have experienced a foreclosure or bankruptcy, FHA loans will typically only require a waiting period of two to three years before you can become eligible to apply.
If you think that an FHA loan would be a good fit for your financial situation, Streamline Mortgage can help you qualify for the best rate, terms, and conditions possible. While we primarily serve as hard money lenders in Las Vegas and Reno, we also provide unconventional loan options such as FHA and VA home loans. To take the first steps toward your dream of home ownership, apply today.