Federal Housing Administration (FHA) Loans
Federal Housing Administration (FHA) loans have the backing of the US government, which helps banks to offer favorable mortgage terms to homebuyers. Even if you don’t have perfect credit or a large down payment, the FHA home loan can work for you. FHA mortgages come with no upper income limit. These mortgages can be helpful for low-income individuals, but you can also qualify if you have a higher income. Many residents here in the Cumberland, MD, area as well as nearby areas in WV and PA, have become homeowners using the FHA mortgage.
Who Is a Good Candidate for the FHA Loan?
The FHA mortgage can be a good option for those who want to own a home without waiting to establish perfect credit and/or save a large down payment first. Waiting to buy a home could see you paying higher prices in the coming years or could cause you to put off other life priorities. FHA loans can be easier to qualify for, but you will need to pay for mortgage insurance to help limit the bank or mortgage lender’s risk in making the loan.
For anyone with a credit score of 580+ and at least a 3.5% down payment, you could qualify for the FHA home loan. Lower scores can also qualify, but you may need to may pay a higher mortgage interest rate. As an example, you could still get the mortgage with a credit score of 500, provided you can offer a 10 percent down payment on your home.
If you’re considering an FHA home loan, keep in mind that the home you purchase must be your primary residence–not an income property investment, second home, or vacation home. As your principal residence, it is the house you consider your permanent home and where you live for most of the year. You can only have one primary/principal residence at a time, according to the FHA.
Federal Housing Administration Loan Benefits
The looser standards for qualifying make this loan attractive and also help families get into a new house much quicker than they could have if they waited to save the traditional 20 percent down payment for a home purchase. For some people, perfect or near-perfect credit may be a long time coming due to past issues like overdue medical bills. Even if you have undergone a bankruptcy or prior home foreclosure, it is still possible to get your new house with the FHA mortgage.
The FHA loan offers extra benefits too. For instance, if you decide to sell your house in the future, the new buyer could qualify to take over your FHA loan. This could save them time and might give them a lower interest rate than they could otherwise find. The take-over option could help your house attract buyers and sell more quickly than other similar homes. FHA loans are not only for lower-income homebuyers, by the way. If your income is higher, you may still qualify for the FHA loan.
How to Apply for Your FHA Loan the Stress-Free Way
If you are interested in pursuing the FHA mortgage, the home loan experts at Homespire Mortgage are happy to answer your questions and guide you through the application process. We serve the local areas of Frostburg, MD, Cumberland, MD, Lonaconing, MD, and Westernport, MD from our headquarters in Cumberland. In WV, we provide mortgages in Short Gap and Keyser, and in PA we serve the Bedford areas.