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FHA loans are insured by the Federal Housing Administration and are designed to help low-income homebuyers get a home loan. If you’ve never had an FHA loan before, you may be eligible for one even if you don’t think your credit score is high enough. FHA loans are the easiest loan to become approved for and require the lowest downpayment. There are few reasons not to opt for an FHA loan if you are approved. If you are eligible for an FHA loan, here are all the benefits you can reap if you’re approved.
- Very Low Down payment
Most conventional loans require 20% of the sales price as a downpayment. Needless to say, in the current economic state, it can be difficult to acquire a downpayment quite so high. With an FHA loan, you can put as little as 3.5% down. An affordable down payment may be the difference between becoming a homeowner now or waiting years to save up enough money. Don’t let a large downpayment hold you back from owning a home.
- Loose Acceptance Guidelines
It’s significantly easier to become approved for an FHA loan than a conventional loan. FHA loans do not require perfect credit scores and low debt ratios. While an extremely low credit score may impede your ability to become approved for an FHA loan, you do not need a score above 700 to get approval. If you’ve been rejected for a conventional home loan, try applying for an FHA loan.
- Gifted Down payment
Conventional loans limit the amount of money that someone can gift you for a downpayment. Most lenders want to ensure that you can afford the downpayment so that you will not default on your loan. But FHA loans do not limit the amount you can receive as a gift for a downpayment. If you have a family member that is willing to pay for your entire down payment, an FHA loan will allow them to do so.
- Easier to Refinance
It’s a lot easier to refinance an FHA loan than a conventional loan. Of course, both loans can be refinanced down the road but you will deal with a lot less red tape with an FHA loan. You may, potentially, not even need a property appraisal to refinance an FHA loan. Refinancing can be a pain and the difficulty of refinancing may keep you from lowering your interest rate down the line. With an FHA loan, you can refinance with the least inconvenience and ensure you always have the lowest rate available.
When deciding between a conventional loan or an FHA loan, it’s important to know the benefits an FHA loan can provide you. If you’ve been denied a conventional loan, that does not necessarily mean you are going to be denied for an FHA loan. If you are unsure whether or not you qualify, apply for an FHA loan today. It may be an application that changes your life for the better.