Don't want to contribute more than 3.5% for a down-payment?Does your credit history have blemishes?Is your debt to income is higher due to extraordinary circumstances?
Most residential loans granted since 2008 require you to secure the loan with a significant down payment of 5 to 10 percent, while FHA loans require as little as 3.5 percent down to open the loan.
The cost of a house is a significant purchase by anyone’s standards. But other costs, such as closing and finance costs, as well as aftermarket repairs and energy efficiency can easily tack an additional several thousand dollars onto the closing costs of your home. Many closing costs may be incorporated into an FHA loan, and closing costs are regulated by the office of Housing and Urban Development. The FHA routinely underwrites mortgages to help homeowners pay for costs of repairs needed in older homes.
If you have less than perfect credit, securing a commercial loan may be difficult. Most commercial lenders won’t provide a mortgage to you for five years after a foreclosure, whereas you may be eligible for an FHA loan a mere three years after a foreclosure. Bankruptcy may disqualify you for a FHA, but you may be eligible for an FHA loan two years after filing.
Because the FHA is guaranteeing your home loan, you’ll be able to tap into favorable mortgage insurance rates that are usually much cheaper than those available if you take out a commercial loan.
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