Are you a first-time homebuyer? Are you already thinking about all the money that you’ll be spending on a house, and maybe it does stress you out a little bit? Are you worried that no bank would want to lend you money to pay for your mortgage because you’ve got a lower credit score than most people?
Well, if this is you, then there is no reason to worry because there’s a scheme called the Federal Housing Administration Loan. This is a loan that most first-time homebuyers could qualify for, and it wouldn’t leave most of them in debt for quite a long period.
The FHA Loan is the perfect loan for all the younger people or younger professionals who legitimately want to purchase their first homes but are scared that they’d end up broke. This is a scheme by different FHA-approved mortgage lenders, and it’s a scheme that the government also insures. So if you’re kind of intrigued by this particular scheme, then read on to find out more!
How Does the FHA Loan Work?
The FHA Loan is perfect for those who might not have the best credit scores or the highest incomes because this loan is specifically made for you! This will help you land the home of your dreams at a point in your life when you’re not expecting it. Although, there is a catch: the borrowers of the loan must pay the FHA mortgage insurance.
To the people who are thinking of applying for the FHA Loan, you should know that mortgage insurance is required on most loans, especially when borrowers put down less than the 20% needed.
How Can You Qualify for A FHA Loan?
As much as this scheme isn’t like any other schemes on the real estate market, there are some requirements that you need to meet in order to qualify for an FHA Loan. These are the following:
- You must have a FICO score of 500 to 579 with 10% down or a FICO score of 580 or higher with a 3.5% down.
- You must have verifiable employment history for the last two years.
- Your income must be verifiable through pay stubs, federal tax returns, and bank statements.
- The loan that you’re applying for should be used for your primary residence.
- An FHA-approved appraiser should appraise the property you want to purchase, and it should meet the HUD property guidelines.
- You must have a front-end debt ratio (monthly mortgage payments) that shouldn’t exceed 31% of your gross monthly income.
- You must have a back-end debt ratio (mortgage, plus all of your monthly debt payments) that shouldn’t exceed 43% of your gross monthly income.
- If you’ve experienced bankruptcy, you must wait for at least 12 months to two years before applying or three years after a foreclosure.
If you think that this would work perfectly for you and your family, then this is something that you should seriously consider! Being a potential homeowner is one of the best things that could happen to a person, and quite frankly, who doesn’t want to have permanent homes of their own?
If you’re looking for a home in Chattanooga, Tennessee, or any nearby area, we’d love to help you out in seeing what your options might be. Call us, the Ryan King Team | Keller Williams Realty at +1 (423) 595 7958. There are so many available housing options around Chattanooga, and we can’t wait to show you your next permanent home!
