FHA loans let first-time buyers put down as little as 3.5% with credit scores of 580 or higher, and allow more flexible debt-to-income ratios than conventional mortgages. You'll pay mandatory mortgage insurance and must live in the home for at least one year, but sellers can contribute to closing costs.
Thinking about buying a home but not sure you'll qualify for a traditional mortgage? An FHA loan might be worth a closer look. Backed by the Federal Housing Administration, FHA loans are designed to help more people become homeowners, especially first-time buyers or those with less than perfect credit. One of the biggest benefits is the low down payment requirement—just 3.5% if your credit score is 580 or higher. Even if the score is between 500 and 579, you might still qualify with a 10% down payment. FHA loans also allow for a higher debt-to-income income ratio than most conventional loans, which can make qualifying easier if you have student loan debt or other debt. And in many cases, the seller can contribute towards your closing costs. But there are some important rules to know. FHA loans are meant for primary residences, not vacation homes or investment properties. You must move into the home within 60 days of closing and live there for at least 1 year. Also, you can usually only have one FHA loan at a time. Exceptions exist. For example, if you're relocating for work over 100 miles away, your household size increases, or you're going through a divorce. But in general, the FHA wants to see you living in the home you purchase. There's also mortgage insurance, which is required for all FHA loans, both an upfront premium and ongoing payments. Still, for many buyers, an FHA loan can be a smart stepping stone into home ownership. Follow for more straightforward real estate info.
