Tips for Getting an FHA Loan

Posted on August 17, 2020

Many people struggle to purchase their first home because they cannot save up a 20% down payment. FHA loans allow people who may not otherwise be able to purchase a home to buy a home. These types of mortgages are insured by the Federal Housing Administration (FHA). 

 

The federal government created the FHA loan program in response to the high number of defaults and foreclosures that happened in the 1930s. The goal of these loans was to provide mortgage lenders with insurance and to stimulate the housing market by making home loans more affordable for those with less than great credit, or with a low down payment. 

 

FHA Loans are Popular for First-Time Homeowners

They are extremely popular among first-time homeowners. These loans allow home buyers to purchase a home with a down payment of only 3.5% of the purchase price of the home, and with credit scores that are above 580. When an applicant provides a downpayment of 10%, his or her credit score can be between 500 and 579. Keep in mind that the lower the credit score, the higher a borrower’s interest will be on the loan. Below, we have provided some tips for those seeking an FHA loan.

 

Discuss Your Loan Needs With a Loan Officer

If you are considering getting an FHA loan, we recommend speaking with an experienced loan officer. There is only so much one can learn from research on the internet. A loan officer can help you understand your options and whether or not you qualify for an FHA. They can help you with your application so you can give yourself the greatest chance possible of being approved for a loan. 

 

While talking with your loan officer, you can discuss the standards of your chosen financial institution. Every company that provides loans has somewhat different standards. We can also help you understand the lending laws in your state for co-signers’ and home loans. 

 

Expect Credit Standards for All Borrowers

If you are applying for a home loan with a co-borrower or a co-signer, you will need to make sure that all of your co-applicants meet the credit standards set forth by the financial institution who is issuing your loan. All FHA loans require all borrowers to meet their financial qualifications. Any shortcomings of one type of applicant will cause the institution to reject the loan application. In other words, if one of the co-applicants falls below the standards, an excellent applicant cannot bring the application who does not meet the standards up. When discussing co-signing, be sure to ask your potential co-signor about his or her credit history. You would not want them to spend their time applying with you if you are certain they would not meet the standards. 

 

Your loan officer will explain to you what is required of all of the borrowers. If you need compensating factors because of any lower credit scores of one or more applicants, your loan officer can explain what you may need. You could need a form of higher down payment, higher interest rate, or other objects. 

 

Consider Purchasing a Multi-Unit Property

If you are an experienced landlord, or if you are purchasing a property with another signor who is a landlord, you may want to consider purchasing a multi-unit property. Applicants seeking FHA loans are not limited to purchasing a single-family residence. Instead, you can apply to purchase a multi-unit property such as a home that has been converted to three apartments, or a set of attached townhomes which you intend to rent out and make a commercial property. Borrowers can use their FHA mortgages to buy a residence with up to four living units. 

 

One major difference between FHA loans and commercial loans is the residency requirement. When applying for an FHA loan, one of the borrowers will need to reside in at least one of the units in residence. For example, in a multi-unit residence, the borrower can live in one unit and rent out the remaining unused units. Your FHA loan officer can provide you with more information about purchasing a multi-unit property and renting out an unused property for a profit. 

 

Use an Approved FHA Lender

If you choose to get a private loan before you apply for an FHA loan guarantee, you should seek the loan with a lender approved by the FHA. The FHA has strict requirements for lenders that your private loan company needs to meet. By doing so, you will only need to complete one loan application. The private lender can approve you for your FHA loan automatically at their respective organization. By doing this, you will save time and hassle. We can help you find a private lender who is approved by the FHA. 

 

Buy Your Home in a Developing Area

Some of the best loans available go to those willing to provide something back to the local economy in the area in which the house is located. Buying a home in a location that is unsafe or still developing often offers the most affordable options. In some cases, you can apply for a grant to buy a home in a developing area. An experienced loan adjuster can help you understand what types of grants are options that are available in your area and guide you through the process of applying. Doing your research is an extremely important part of securing an FHA loan mortgage. 

 

Contact Justice Roberts Mortgage Team Today

If you would like to purchase a home, but you do not have the downpayment amount, Justice Roberts Mortgage Team is here to help. We offer a variety of loan options that can help you achieve your dream of owning your own home. Contact us today, or apply online to learn how to put our mortgage services to work.