6 Things to Know About Getting an FHA Loan
You may have heard about FHA home loans but are uncertain as to what they involve and how they differ from conventional home loans. The Federal Housing Administration, (FHA,) offer these FHA house loans to people who may otherwise struggle to buy a home. This could be because they have a somewhat limited budget or a less than ‘clean’ credit history.
So if you don’t have a perfect credit score or are concerned that you could not afford a mortgage, then an FHA loan may be the right way for you to go. FHA home loans are more affordable and are easier to qualify for (than other types of mortgage,) due to the fact that they are federally insured and all lenders are approved by the Federal Government.
Although FHA home loans are easier to obtain, they do still have certain requirements which you need to be aware of before applying.
- You will need to prove that you have been employed for at least 2 years in the same kind of work and that your salary has stayed the same or has increased over that time.
- You will still need to have available funds to pay the deposit which is usually a minimum of 3.5% of the total purchase price of the property.
- Make sure that you make an appointment with a local FHA-approved mortgage broker – not all brokers can offer an FHA house loan.
- Ensure that you have all the necessary paperwork to hand to prove your status of employment, as well as tax documents, any change of address within the last 2 years and valid W2 forms.
- Make sure that the house you which to buy is in a good state of repair as it will need to be appraised to ensure that it is worth the amount of money you wish to borrow. This appraisal is completed by an FHA-approved appraiser.
- Be aware that you will need to pay 2 kinds of mortgage insurance premiums with an FHA loan – upfront Mortgage Insurance Premium (MIP,) as well as a monthly payment.
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The information provided herein has been prepared by a third party company and has been distributed for education purposes only. The positions, strategies or opinions of the author do not necessarily represent the positions, strategies or opinions of Guild Mortgage Company or its affiliates. Each loan is subject to underwriter final approval. All information, loan programs, interest rates, terms and conditions are subject to change without notice. Always consult an accountant or tax advisor for full eligibility requirements on tax deduction.