There are various kinds of housing loans. However, the FHA housing loan is the most popular housing loan amongst new buyers. This is because it provides the customers with various benefits and does not have any strict rules and regulations. The Federal Housing Administration provides the FHA loans.
They are the most preferred because the down payment of the loan is very less and the credit score is very high. If you are planning to buy a house, you can go for FHA loans. In this article, we will be talking about FHA loans in detail and their benefits.
What are the major characteristics of FHA loans?
FHA loans are pretty common these days. Below are some of the characteristics of the FHA loans –
- The down payment that is to be paid is as low as 3.5%. Whereas the credit score of the FHA loans is as high as 580%. However, if the borrower is paying 10% down payment, he/she will be rewarded with a credit score between 500-579%.
- Any person is qualified to acquire such loans.
- Though it is extremely important to clarify that if the borrower is receiving a low credit score, the borrower will get higher interest.
What are the requirements for such loans?
If you are planning to get a FHA loan, you will need to fulfil some requirements of the FHA mortgage lender. Some of these requirements have been mentioned below –
- The borrower must have a static employment history. This will ensure the lender that the borrower will be able to pay the instalments.
- The borrower is required to pay minimum down payment. This will rely on the lender.
- It is essential to have property appraisal from any FHA-approved appraiser.
- The borrower’s front-end ratio must be less than 31% of their annual income. The lender may provide the borrower with some compensation.
- It is important to have a credit score of 580 to gain maximum financing.
- It will be important for the borrower to stay out of bankruptcy in order to achieve a good credit score. This is usually done to ensure the lender that the borrower will not default the payments.
The above terms mentioned are the FHA loan terms that you are required to fulfil.
Know the benefits of FHA loans
There are various benefits provided by the FHA loans. Some of them have been listed below –
- Low down payments – as it has been discussed above, you are required to pay low down payments when you go for FHA loans. By this, you can save a lot of money to fulfil your other instalments.
- FHA loans are assumable.
- Lower credit thresholds – the major benefit of a FHA loan is, you are not required to have any long credit history.
If you are planning to buy a new house, you can go for FHA loans offered by the NLC Loans. They will provide you with money-saving options to maximize your benefits. They even offer FHA loans at minimum down payments so that you are able to save a lot of money. Not just this, they also offer other varieties of housing loans.