Buying Your First Home: 3 Reasons An FHA Home Loan May Be Right For You
There are so many tasks to complete when buying your first home. Choosing a mortgage loan is certainly among the most important of these tasks. For many first-time home buyers, choosing between a conventional mortgage and an FHA home loan can be a difficult choice to make. If you are currently trying to make this decision as well, you will want to continue reading below to learn more about three of the reasons why FHA home loans are often ideal for individuals who are buying their first home.
1. FHA Home Loans Have More Relaxed Gifting Rules
Conventional mortgage loans typically have very strict rules regarding who can give a financial gift in order to help cover the down payment on your home loan. In many cases, you will be restricted to gifts that are given by immediate family members and your spouse. This means that you will not be able to use financial assistance from a first-time home buyers program to help you pay your down payment. This is not the case when choosing an FHA home loan. This is because FHA home loans offer significantly fewer restrictions when it comes to gifts.
2. FHA Home Loans Traditionally Require A Smaller Down Payment
Saving up enough money for a down payment is a problem that many first-time home buyers encounter. In many cases, the need to save up a large down payment can cause individuals to postpone buying a house for several years. FHA home loans make it easier for people to buy their first home by requiring a smaller down payment. It is important to note, however, that your lender may require you to carry mortgage insurance for the first several years of your loan when making a smaller down payment due to the greater risk the lender is taking.
3. FHA Home Loans Are Easier To Qualify For If You Have A Lower Credit Score
If you have been having trouble qualifying for a conventional mortgage due to having a lower credit score, an FHA home loan could be the answer you are looking for. This type of home loan is often easier to qualify for since they require a lower minimum credit score than most conventional loans. This can be especially beneficial to first-time home buyers since these individuals will often have a limited credit history or may fail to have a variety of different types of credit accounts.
For more information on FHA home loans, contact a professional near you.