Why All the Buzz About FHA Loans?
The Federal Housing Administration was created more than 75 years ago with the express purpose of helping more Americans qualify for home loans. Over the past decade, as conventional lenders have tightened qualification guidelines, more consumers are turning to government-backed loans as a means to make their home ownership dreams come true. Here are three benefits prospective home buyers may find with the FHA loan program:
You Don’t Need Stellar Credit
While the average credit score of buyers securing conventional loans is a whopping 754, FHA loan-holders average a score of 686. This means prospective buyers whose credit has been damaged by bankruptcy, a previous home foreclosure, or even an unpaid federal tax debt may still repair their credit enough to qualify for an FHA loan.
You Can Carry More Debt
Consumers with conventional loans pay an average of 35 percent of their income on recurring debt payments. FHA loan-holders, however, average 41 percent toward debt. This means those saddled by credit card debt, student loans and more may be eligible for an FHA loan even if they’ve been turned down for a conventional loan.
You Can Make a Smaller Down Payment
The down payment is often cited by wishful buyers as the number one deterrent to purchasing a home. FHA loans allow consumers to put down considerably less than a conventional lender, sometimes as little as 3.5 percent of the purchase price. The funds may also come as a gift from family or friends.
FHA loans are allowing more Americans to become home owners. To learn more about this flexible mortgage loan program visit the FHA website.
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