Do you think an FHA loan is right for you? Before getting pre-approved for an FHA loan to buy a home, what do you need to know? It’s vital that you have all the details in place and know what to expect when you get started. Here are the basics of FHA Loans, who qualifies, and how to work with GoPrime to make it happen.
What is an FHA Loan?
An FHA loan acts as a gateway to homeownership for individuals with lower incomes or credit scores or who might have a minimal down payment. Borrowers choosing an FHA Loan are eligible for a loan with as little as 3.5% down and a mortgage insurance premium. You can learn more about mortgage insurance here.
When did FHA Loans Start?
FHA loans have a long history of making homeownership more accessible. The Federal Housing Administration program started during the Great Depression in the 1930s. Rates of foreclosures and mortgage defaults rose sharply in the wake of the economic uncertainty of the age. It has become the largest insurer of residential mortgages since 1934. Today, it primarily serves people who cannot afford a conventional down payment.
What are the Requirements for FHA Loans?
Not everyone can qualify for an FHA loan. You’ll need to meet some specific requirements before we can discuss this as an option. Here is what you need to know.
- Mortgage Insurance Premium: You would need private mortgage insurance or PMI that will protect the lender if you default on the mortgage.
- Primary Residence: FHA loans can only be used for a primary residence, so you can’t get one for an income property or a second vacation home. An approved appraiser must evaluate the property to ensure it meets the Housing and Urban Development guidelines to qualify for an FHA loan.
- Employment and Steady Income: FHA loans also have employment requirements for borrowers. FHA-approved lenders must verify employment with your current employer before proceeding.
What are the Benefits of a FHA Loan?
There are several benefits for buyers when approved for an FHA loan. For a first-time home buyer, you don’t need a high credit score to qualify, and you’ll have a low down payment. Even buyers with bankruptcy or foreclosures on their credit reports can still qualify. A higher debt-to-income ratio is allowed. Several housing options, including single family homes, multi-family homes with up to four units, condos, or manufactured homes on a permanent foundation can qualify. No income limits exist, so even higher-income earners with credit issues can be eligible if they can meet the minimum down payment.
Call, Click, or Come In!
GoPrime Mortgage in Ashville, NC, is here to help our neighbors find their road home. Talk with Zachery Adam and his team of independent lenders to start the process of getting pre-approved. Learn more at GoPrimeNC.com and contact us today.