The Federal Housing Administration (FHA) loan is a government-issued loan for homebuyers seeking lower down payments. The FHA loan is primarily issued to people who do not qualify for a conventional loan, therefore indicating that the qualifications for receiving this loan are considerably more lenient than other mortgage loan types. As one of America’s leading mortgage lenders, we at K2 Lending have over 15 years of experience dealing with several mortgage plans. Here are some benefits of getting an FHA loan:
Low Down Payments
If you have a low credit score, you may be eligible for getting an FHA loan with a low down payment. In theory, FHA requires potential homebuyers or property buyers to put down a 3.5% down payment if they have a credit score of 580 or more. This means that unlike a high credit score of 620 required for a conventional mortgage loan, users can easily apply for an FHA loan and get it approved as well. Moreover, unlike other mortgage loans, the FHA loan allows family and friends to contribute towards your down payment as well.
No Income Limits
With an FHA loan, new homeowners don't have to have a certain level of income. This means that with a high income, you can easily apply for an FHA loan and get a low down payment option. On the other hand, if you are a high-income household, you will not be able to apply for a conventional mortgage loan with a 3% down payment. For more information about the income requirements for an FHA loan, reach out to our team.
Cheap Monthly Mortgage Insurance Payments
Did you know that you are not subjected to high monthly mortgage insurance payments with an FHA loan? This is because, unlike private mortgage insurance companies, the FHA mortgage helps empower people to increase their buying power regardless of low credit scores. Therefore, unlike conventional mortgage loans, you will only be paying an average monthly premium with an FHA loan. If you are unsure how this affects you as a new home buyer, schedule an appointment with our team to discuss this and any related concerns.
Several Property Options
With an FHA loan, the world is your oyster. The FHA loan can be applied to any of the following property options:
- Single-family homes
- Multi-Family homes with a maximum of two to four units
- A condo
- Many others!
Bonus tip: with an FHA loan, you can get a multi-family home at a 3.5% down payment and qualify to rent out the other adjoining units. However, this is only applicable if you have lived at the property for at least a year.