https://youtu.be/wRb2qK0RkDU There is no set definition about what is considered pre-qualified and what is…
What Is An FHA Loan And Is It Right For Me? | Omaha NE Homebuyer’s Guide
What is an FHA loan?
FHA loans are issued by private banks and institutions but guaranteed by the Federal Housing Administration. The FHA guarantee means borrowers qualify for a low down payment loan even with less than perfect credit.
FHA is NOT a first-time home buyer program
FHA allows buyers with less than perfect credit, a small down payment, and moderate income to qualify for financing so it is used by many first-time home buyers. However, it is not required that a buyer be a first-time home buyer.
What are the advantages of an FHA loan?
FHA only requires 3.5% down on credit scores as low as 580. FHA also allows the seller to cover up to 6% of the closing cost and escrow to help further reduce a buyer’s cash needed. An FHA loan will also allow non-occupying co-signers to apply to help a buyer qualify.
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What are the disadvantages of an FHA loan?
While FHA typically has lower rates than a conventional loan, its Mortgage Insurance is often higher and, unlike Conventional, it stays on for the life of the loan (though that may be changing). FHA is also limited to a $314,827 loan amount. A buyer is also limited to one FHA loan at a time. This limit may prevent a buyer from converting a primary home into an investment property in the future.
How do I know if I should use an FHA loan?
A good Loan Officer will be able to review your credit, income, and assets to determine if an FHA loan is a better option. If your credit scores are in the mid-600s, an FHA loan might be a better option even though you qualify for other programs. For many buyers, it might be a good idea to have a long-term strategy to start with an FHA loan and plan on refinancing it once the credit and income improve. The Petrovich Team provides monthly reports and does annual reviews to find opportunities to improve our client’s financial picture.
The Petrovich Team Home Loan is your Omaha lender. We can present you with home loan options and develop a long-term strategy to manage your mortgage debt. Many buyers assume they do not qualify for home financing before ever reaching out to a Loan Officer. Reach out to our team and we will guide you through the home buying process.
Other useful links
- How to improve your credit
- The 20% down rule on conventional
- What is Escrow?
- How is income calculated?
- Why your assets matter
- Mortgage Calculator
- Is Credit Karma accurate?
- FHA vs Conventional, which is better?
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