It’s common knowledge that, when you are getting ready to purchase your first home, you should shop around for mortgages instead of taking the first offer. While you are considering all your options, you should take into account the advantages of applying for a loan from the Federal Housing Administration (FHA).
FHA loans can be a great alternative to a conventional mortgage
The Federal Housing Administration is a part of the U.S. Department of Housing and Urban Development. They offer low-interest loans, commonly called FHA loans, to people in specific circumstances. If you’re a first-time home buyer, you might be able to take advantage of an FHA loan to get into your house while paying less every month in interest.
If you qualify for an FHA loan, you won’t get the loan from the FHA directly. Instead, the FHA will guarantee your loan to an approved lender, who can then lend you the money for your home with less risk to them. This decrease in risk is what allows that lender to offer you a lower interest rate and require a smaller down payment.
In some cases, first-time home buyers with an FHA loan can get into a home by only paying a down payment of 3.5% of the total purchase price. FHA loans also allow you to add your upfront mortgage insurance premium directly into the mortgage, thus taking even more financial pressure off of you in the beginning.
There is a set process for applying for an FHA loan, including a list of qualifications that you must meet before you will be approved. It could be a good idea to consult an experienced real estate attorney to assist you with the process. They will be able to help you get all of your documentation in order, to make the application process run smoothly.
Whether you accept a conventional mortgage or apply for an FHA loan, hopefully you will soon be able to walk through the front door of your first home without too much of a financial burden.