Are you looking for a Mortgage Lender that specializes in FHA loans in the Woodlands? If so you have come to the right place! At Core Lending we love FHA loans and our past customers do too. FHA stands for Federal Housing Association and long story short it is a government backed loan. This means the government sets the underwriting guidelines to make it easier for homebuyers to buy their dream home.
You may read a lot of different opinions about FHA loans online but lets go over some facts about them:
- Credit friendly– One great benefit is that FHA loans are not as strict on credit score requirements like conventional loans. For us we can do FHA loans down to 580. And if your credit is just good but not great, FHA loans do not stick you with a terrible interest rate. While the opposite is true for conventional loans where a credit score of 740 is required to get the best interest rate possible.
- 5% down payment- FHA requires a min down payment of 3.5%. While on a conventional loan if your credit is not perfect a down payment of at least 5% is need and sometimes up to 20% could be required. If you do have perfect credit conventional loans do offer a 3% down payment, but you would want to compare that loan and a FHA loan, as the rate and mortgage insurance will be different for both depending on the credit score.
- Your Parents can cosign on the mortgage with you– On FHA loans your parents can cosign for you, this is a huge benefit as you can use their income toward helping you get approved. You can also have any of your immediate family cosign for you such as: mom, dad, brother, sister, grandparents, etc.
- Higher debt to income ratio– When getting approved for a mortgage one of the biggest items that the underwriter looks at is your debt to income ratio. This is your total debts divided by your gross income. On FHA loans you are allowed to go up to a debt ratio 50% and sometimes as higher as 55%. Vs on a conventional loan you would maybe limited to 45% when putting down 5% etc
- Shorter wait time after a Foreclosure– Another HUGE benefit to FHA loans is that after a foreclosure you only have to wait 3 yrs vs on a conventional loan you may have to wait at a minimum 4yrs. Or most of the time the wait is up to 7yrs.
- Shorter wait time after a Bankruptcy– On a FHA loan you only have to wait 2yrs after a bankruptcy, while on a conventional loan you would have to wait 4yrs.
- Seller paid closing costs– On a FHA loan the seller can pay 6% of the sales price toward your closing costs and money needed for the escrow account. If you negotiate with the seller to pay all of your closing costs, it would leave you with just needing the 3.5%(of the sales price) for your down payment. While a conventional loan with a 10% down payment or less, they will only allow the seller to pay 3% of the sales price toward your closing costs.
As you can tell there are a lot of HUGE benefits to the FHA loan. And if you are looking a lender you can trust and knows FHA loans, call Core Lending today!