Whether your goal is to buy a home before the holidays or you plan on waiting until the new year, understanding the mortgage programs available to you can help you prepare. After all, just like your dream home is unique, your mortgage program should be unique to your financial situation. One mortgage program that can help you reach your homeownership dreams sooner rather than later is an FHA loan. Here’s what to know about FHA loans and how they may be able to help you buy a home.
What Exactly is an FHA Loan?
If you’ve already started researching mortgage options, you’ve probably seen references to FHA loans. But what exactly is an FHA loan?
FHA loans are loans insured by the Federal Housing Administration (FHA) and have less rigorous lending standards and down payment requirements. This mortgage program is a popular option to first time home buyers because they provide financing opportunities to individuals who may not qualify for conventional mortgage programs. Currently, the single-family loan limit for Michigan is set to $472,030, and the mortgage term is 30 years.
Key Benefits of FHA Loans
Lower Down Payment Requirements
Many homebuyers believe all mortgage programs require a 20% down payment. However, FHA loans have lower down payment requirements at 3.5% down, which can make the homebuying process more affordable.
More Accessible Credit Qualifications
This mortgage program has more accessible credit qualifications compared to other loan products.
Additionally, the FHA will take positive rental payment history into consideration. This can make a big difference for applicants that might not have a lot of credit history built up yet.
Read More: FHA Now Including On-Time Rental Payments to First Time Home Buyers
May Help Borrowers with Student Loan Debt
Due to the way FHA loans factor in student loan debt, they can provide a more favorable Debt to Income Ratio (DTI) than other loan products. This can increase buying power for borrowers as DTI is a significant factor in how much homebuyers can borrow for their mortgage.
Fixed Rate Term
Some mortgage programs offer lower interest rates for a period of time, but those rates are adjustable, making budgeting difficult. FHA loans have a fixed rate, meaning the rate you lock in will remain throughout the life of your 30-year mortgage.
Your Mortgage Lender Can Help You See the Big Picture
There are some factors to consider when deciding to apply for an FHA loan. For example, they require mortgage insurance premiums (MIP) from borrowers and at least a two-year employment history with current employers. However, your trusted mortgage lender can help you see the big picture and decide on the program that fits your unique needs.
About Julie Krumholz from Superior National Bank
Ready to start the homebuying process? Julie Krumholz from Superior National Bank can help!
Julie Krumholz has been helping homebuyers for over 30 years and has several loan programs available for various incomes and financial situations. She’s experienced nearly every facet of the mortgage industry, from processing, closing, loan origination, underwriting, QC auditing, and even co-owning a mortgage brokerage firm. Julie uses her wealth of experience to match homebuyers with the best mortgage program for their needs and helps streamline the mortgage process.
Call Julie Krumholz for help with your homebuying needs at 586-382-5482
