Buying a home can be thrilling — and nerve-wracking especially for a first-time buyer. Today many first-time homebuyers have money issues that often stand in the way of homeownership. For a lot of first-time homebuyers’ people have financial problems with their credit, not making enough salary or owing massive amount of debt. What you may not realize is that many first-time homebuyer programs offer financial help for those who are in need. You may be eligible for various types of assistance such as grants and loans such as Hollywood FHA Loans and Hollywood Jumbo loans.
What Is FHA Loan?
An FHA loan is a mortgage that’s insured by the Federal Housing Administration (FHA). The FHA is a federal government agency within the US Department of Housing and Urban Development. We know first-hand how popular these loans are among first-time home buyers because they allow down payments of 3.5% for credit scores of 580+.
FHA plays a significant role in helping low- to moderate-income families qualify for Hollywood Reverse mortgages. FHA assists first-time buyers and others who would not qualify for a conventional loan, by providing mortgage insurance to private lenders. The FHA program was created in response to the rash of foreclosures and defaults that happened in the 1930s. The program was created to provide mortgage lenders with adequate insurance and to help stimulate the housing market by making loans accessible and affordable for people with than stellar credit or a low-down payment.
What Are the Standard FHA loan requirements for First-time homebuyers?
If you’re a first-time home buyer and are interested in applying for an FHA loan, it is important that you know the minimum requirements to avoid unnecessary stress. FHA loans were put into place back in 1934 by the Federal Housing Administration to assist lower to middle-income Americans who become homeowners and to help boost the housing market. We do not outright provide loans to applicants, but they back the loans by providing two types of private mortgage insurance. This mortgage insurance protects the lenders who extend the loans. To qualify for an FHA loan, you must meet the following requirements:
- Minimum credit score of 580
- 3.5% down payment or a 10% down payment if credit is between 500 – 579
- Documentation of income (pay stubs, tax returns and W2’s)
- Must be primary residence (cannot be used for second home, vacation home or rental property)
- CAIVRS (Credit Alert Interactive Verification Reporting System) must be clear. This database shows people who have defaulted on government loans, owe back taxes or who have other federal debt.
If you meet the standard FHA loan requirements, you will have what you need to proceed with applying for this type of loan.
How to Get the Best FHA loan mortgage rates?
If you meet the standard requirements to get an FHA mortgage loan, there are a couple of things you can do to get the best possible rates. When Nationwide Mortgage Home loans decides to extend financing to an applicant, we look at several factors to see if the client has a risk of defaulting on the loan or not. If the applicant has poor credit, they have a track record of not paying their bills on time thus having a higher likelihood of defaulting on the loan.
If you want to lower the rate you receive, you need to work on improving your credit score before applying for a mortgage loan. The best way to improve your credit would be first to pay your bills on time and then pay off any credit card debt. Once you pay off the credit cards, you should leave them open as this reflects positively on your credit and raises your credit score.
How Do You Apply for an FHA home loan?
If you want to purchase a home but are afraid that your low credit score or other financial burdens will not qualify, then you should look into an FHA loan. The Federal Housing Administration in 1934 would offer insurance to private lenders if they extended financing to those with poor to medium credit and who have little to no savings. The reason they did this was to provide a boost to the stagnant housing market that was left devasted by the Great Depression.
Qualify for FHA Loan
The applicant will need to have a minimum credit score of 580 and have a minimum down payment of 3.5%. If the applicant has a credit score between 500-579, some lenders will still extend credit if they put a down payment of 10% down. If the applicant does not have a credit history, some lenders will make allowances to extend financing. If the applicant cannot cover closing costs, some FHA lenders will offer to pay these fees but charge a slightly higher interest rate to offset the difference. The applicant will also be required to pay two separate types of mortgage insurance which can typically be rolled into the loan itself. If the applicant needs extra cash to make repairs, some lenders will allow them to borrow the extra money. Of course, before it gets this far, the home must pass appraisal from an FHA approved appraiser.
Are FHA home loans your key to homeownership?
Have you dreamed of home ownership but felt that due to your income, credit score and other financial burdens that is not within your reach, FHA home loans may be the solution you have been looking for. To qualify for an FHA loan, the applicant must have a minimum credit score of 580 and the ability to put 3.5% down. If the credit score is below 580, some lenders will still consider offering loans if the applicant can put at least 10% down. The home being purchased must also pass inspection from an FHA home appraiser. If your credit score is within the required limits and you have the minimum down payment, then you should contact our lenders for help applying for a loan.