FHA loans were created back in the 1930’s to promote home ownership. These loans are preferred by first-time home buyers, being considered far superior to conventional loans. FHA insures lenders against financial loss in case the borrower defaults on the loan. Back by these guarantees, lenders can approve many low to moderate income borrowers. Borrowers can qualify for an FHA loan with a down payment as little as 3.5% and a credit score of 580 or higher. The borrower’s credit score can be between 500 – 579 with a 10% down payment. Still, you should acknowledge that the lower the credit score, the higher the interest borrowers will receive. FHA loans are used strictly for owner-occupied homes. This means that you will live in the home you will be buying. The loan terms do not apply to second homes or rentals. You can buy a single-family home, as well as a duplex, triplex or fourplex, or any multi-unit housing structure, as long as you live in one of the units. The loan is also available for manufactured homes or for rehabbing a home.
The main benefits of a FHA loan are pretty attractive:
If you need to understand more about FHA loans, our mortgage specialists will explain the whole process to you. Mortgage Brokers California will offer you a FREE CONSULTATION on how to get the perfect FHA loan. Call us now (323) 692-1080.