Financing a home seems like a daunting task for many, but FHA loans make the dream of owning a home feasible for people across the United States. The Federal Housing Administration (FHA) was created in 1934 to increase homeownership in America, and that is exactly what the loans today do. An FHA loan in Redding works as others do across the country and can help certain groups of hopeful homebuyers get their foot in the door of homeownership.
Homebuyers For The First Time Approximately 46% of first-time homebuyers in 2017 had assistance from an FHA loan to make their purchase. FHA loans have very low down payments of 3.5%, while standard mortgages have anywhere from a 5% to a 20% downpayment on a home. This small adjustment makes all the difference for people looking to make the transition from renting to owning for the first time. While an FHA loan in Redding would be very useful for first-time buyers, borrowers who have previously owned a home or even used an FHA loan in the past can still qualify for an FHA loan for a new home.
Homebuyers With Low Credit Scores A low credit score can bar many people who are looking to buy a home. While a typical mortgage would require a borrower to have a credit score in the range of good to great, an FHA loan with a 10% down payment requires only a credit score of 500. A loan with 3.5% down requires a score of at least 580. Those with credit scores under 500 are typically ineligible for FHA loans, but the agency will occasionally make exceptions for applicants who have credit histories that are nontraditional or insufficient if they meet the other requirements.
Homebuyers With A Low-Income Anyone can have the dream of owning their own home, but those with lower incomes often find obstacles in the high down payments and debt to income ratios. As previously stated, the down payments for FHA loans are typically low. Lenders have been able to approve up to a 50% DTI ratio for hopeful applicants. This allows those who manage debt from other loans and credit cards well to possibly buy a home.
By applying for an FHA loan in Redding, the option of buying a home is made possible for a much wider range of applicants. If you think you could use an FHA loan in your home buying process, contact a mortgage company as soon as possible.