A lot of people are planning to buy a house this mid-year, and if you are one of them, then that’s good for you since it will be one of the most significant decisions you are going to make in your lifetime, and not everyone can do it.
Furthermore, even if you lack funds to buy a house, there are still ways to get the home of your dream, and one way to do it is by applying to a government-insured mortgage loan such as fha loan texas. To understand better what is fha loan texas and what it can do for you, we have listed below essential facts about this type of mortgage loan.
What is an FHA Mortgage Loan?
If you belong to the average earners and don’t have enough cash reserves to buy a house in cash, then applying for an FHA mortgage loan is the best choice for you. The Federal Housing Administration (FHA) will protect the lenders by insuring the amount loaned by a borrower even if the borrower has a low credit score and won’t be able to provide at least a 20 percent downpayment.
What are the requirements for an FHA Mortgage Loan?
As mentioned earlier, an FHA lender won’t be strict with when it comes to the loan requirements. However, the requirements might still vary depending on the lender’s preference. For example, some lenders approve borrowers with FICO score as low as 500, while some lender requires at least 620 to 640 FICO score.
Moreover, FHA Mortgage Loan will accept low downpayment as low as 3.5 percent from the total amount you are going to loan. However, availing the lowest downpayment means you have to pay for mortgage insurance premiums (MIP). It is mandatory for borrowers as a protection for the lender if a borrower stops paying the amount loaned. Your MIP obligation will be added to your monthly dues on top of the principal and interest.
Furthermore, as a borrower, you still need to provide your lenders proof of income and employment as proof that you have a stable job. For self-employed homebuyers, they need to provide at least two years of their tax returns so the lender can accurately compute the monthly average income of the borrower.
Always keep in mind that every lender has different requirements so to save you from a tedious task of completing the mortgage loan requirements, then better hire a mortgage broker.
What are the benefits of an FHA Mortgage Loan?
When it comes to affordability and interest rates, FHA Mortgage Loan is a lot better compared to conventional loans. It is also easier to get approved, and you can enjoy their lowest downpayment.
What is the downside of an FHA Mortgage Loan?
As mentioned earlier, if you are going to avail the lowest downpayment, then you have to pay for mortgage insurance premiums. It will be an added cost to your monthly dues, and it protects the lender and not you.