Minimum FHA Down Payment Incentives
FHA home loans are loans which are backed by the Federal Housing Administration. Targeted at encouraging lenders to make financing available to people with lower credit score or limited credit, FHA loans directly serve first-time buyers but you are not required to be a first-time homebuyer. FHA financing is ideal for any group underserved by conventional home financing options.
Are you struggling to put money aside for a down payment on your first property? if so, one of the biggest incentives of FHA loans stems from the fact that FHA down payment requirements can often stand at as little as 3.5% of a property’s overall market value.
Should I get an FHA Home Loan?
If you have had credit issues or little in the way of existing capital, FHA home loans are a fantastic way to realize your dreams of home ownership. This is because FHA loan providers will allow you to use money gifted to you (as well as money from other sources) for your FHA down payment. Even better, some states offer dedicated FHA down payment grant assistance.
Of course, there are potential pitfalls when it comes to FHA home loans. Ongoing monthly insurance fees of 0.85% can make FHA loans themselves much costlier than many more conventional home financing options. This being the case, if you have a credit score of 700-800, it is definitely worth weighing the benefits of conventional financing against different FHA home loan options.
FHA Max Loan Amount & Qualification Requirements
FHA max loan amounts vary from state to state. According, however, to a statement from the Department of Housing and Urban Development, maximum FHA home loan amounts in high-cost areas currently stand at $362,250.
Of course, there are certain restrictions on who can apply for an FHA home loan. As a rule, as well as an FHA down payment of 3.5%, applicants also need to have a FICO credit score of at least 580. At the same time, FHA home loans can only be used to purchase property which will be used as a person’s primary residence, not a second or vacation home. We can go down to a 500 score with 10% down.
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