Why should you investigate an FHA home purchase? There are many reasons, especially for people looking at options for their first home. First-time homebuyers have a distinct advantage with FHA loan options compared to conventional loans--it’s easier to qualify for an FHA home mortgage.

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Reasons to Consider an FHA Home Loan

Why should you investigate an FHA home purchase? There are many reasons, especially for people looking at options for their first home. First-time homebuyers have a distinct advantage with FHA loan options compared to conventional loans--it’s easier to qualify for an FHA home mortgage.

FHA home loans are guaranteed by the government, so the loan application is more attractive to participating lenders. Many typical first-time FHA home loan applicants are young and in the early phases of their careers. Many are still paying on student loans, credit card debt from college or other debt. FHA home mortgages often wind up offering less expensive monthly payments.

Another advantage for the first-time homebuyer? FHA home loans don’t require a big down payment at closing time. A typical borrower in the early stages of a new career often doesn’t have a lot of money set aside specifically for purchasing a home. The terms of an FHA mortgage includes a 3.5% down payment. That money can come from a variety of sources including HUD down payment assistance grants or gifts from family members.

For first time buyers, closing costs are another consideration. Typical closing costs for FHA home loans are up to 3% of the total mortgage. An advantage of some FHA loan product--the terms can allow you to build in closing costs into your mortgage.

FHA home mortgages aren’t just for first-time home buyers. FHA refinance loans help people get out of toxic debt situations caused by sub-prime mortgages with interest rates that have spiraled out of control. FHA home mortgage refinancing is a way to keep your home and prevent damage to your credit rating. The advantages include a low fixed rate mortgage guaranteed by the FHA, predictable mortgage payments and better interest rates for those who qualify.

The FHA also provides cash-out refinancing. Do you need to set aside money for additional college study or major home improvement projects? FHA cash-out refinancing mortgages offer lower interest rates than traditional home equity financing loans. Consider one of two FHA mortgage plans which offer cash-out plans; one with loan amounts for up to 95% of the appraised value of the home, another for up to 85% of the appraised value. Each program has its own specific requirements and rules; your loan officer can inform you of your options under FHA cash-out refinancing mortgages.

FHA mortgage loan payments should consist of no more than 29% of your monthly income. The loan officer will ask for verification of your income to calculate your debt-to-income ratio with the new loan. It is true that borrowers can get conventional loans using “stated income”, but requirements for FHA mortgage products including FHA refinancing loans require copies of your income tax returns to verify the actual amount of money you report to the government.

FHA home loans have requirements for income, debt-to-income ratios, and maximum loan amounts. The kind of FHA loan you apply for is unique, there’s no one-size-fits-all lending product from the FHA. Ask your lender for assistance in learning which FHA mortgage is right for you. If you aren’t satisfied with your current lender, consider getting applying for an FHA home mortgage at a new bank.