Did you know that most homebuyers qualify for an FHA loan? It's true! With favorable rates, flexible credit requirements, and low down payment, many falsely believe that this fed-backed is only available to low-income buyers.
Let's debunk a few misconceptions and shed light on what this type of loan can do for you!
Fact: Nope! FHA loans are open to anyone who meets the financial requirements. While they certainly appeal to first-timers, thanks to their lenient credit score and down payment criteria, FHA loans are available to ALL BUYERS seeking affordable home financing solutions.
Fact: Good news! While lenders do consider your student loan debt when calculating your DTI ratio, the guidelines have changed. They must now use the actual payment amount for student loans or 0.5% of the balance if the payment is showing zero or is deferred. So, those lingering loans won't necessarily slam the door shut!
Fact: Sorry to burst your bubble, but the size of your down payment doesn't let you escape mortgage insurance. No matter how much you put down, you're required to pay the mortgage insurance premium (MIP). The MIP is due at closing and on a monthly basis throughout the loan's duration.
However, if your downpayment is at least 10%, you can get rid of MIP after you've made payments for 11 years.
Fact: Busted! There's no income limit to hinder your FHA approval. However, you do need a two-year employment history and an established credit history to qualify. As long as you've got those boxes checked, you're good!
Fact: Time to expand your home search! FHA loans can be used for a variety of properties, including those with one to four units. Even manufactured homes can be financed using an FHA loan. Just remember the value of the home must fall within the FHA loan limits. Currently, the national FHA limits for a single-unit property range from $472,030 in lower-cost areas to $1,089,300 in more expensive locales.
So, whether you're a seasoned buyer or a newbie on the block, FHA loans offer a helping hand in your quest for homeownership.
If you're feeling overwhelmed and unsure where to start, we're here to help! Contact us today and get all the details about leveraging FHA's favorable rates to make your home purchase more affordable.