FHA mortgage programs provide a path to homeownership for borrowers with limited cash low down payment and/or lower credit scores. As the mortgage is insured by the Federal Housing Administration, FHA-approved lenders are willing to approve these loans despite a 500 credit score and a 3.5% down payment. So, you could easily get approval.

But before you apply for an FHA loan 500 credit score Texas, you need to know a few crucial things. Here, we have enlisted a few for you –

  1. These loans have more lenient qualifications requirements

It is easier to qualify for an FHA loan than for a traditional home loan program. FHA loan rules help borrowers to fulfill their dream of homeownerships who might not have an extensive credit history or who need to use gift money to make a down payment. The basic requirements that you need to fulfill to get loan approval are at least 500 credit score, a debt-to-income ratio of 50% or less than that, a minimum 3.5% down payment, the house should meet the FHA’s minimum property requirements and be your primary residence.

  1. FHA home loans require mortgage insurance

FHA mortgage insurance is a must for all FHA loans. Unlike the private mortgage insurance paid by conventional borrowers who put down less than 20% FHA mortgage insurance could not be canceled just because you gain sufficient equity. If you make a down payment that is under 10%, FHA mortgage insurance lasts for the life of the loan. With a 10% or higher down payment, you will pay FHA mortgage insurance for 11 years.

  1. FHA home loans require mortgage insurance

FHA mortgage insurance is a must for all FHA loans. Unlike the private mortgage insurance paid by conventional borrowers who put down less than 20% FHA mortgage insurance could not be canceled just because you gain sufficient equity. If you make a down payment that is under 10%, FHA mortgage insurance lasts for the life of the loan. With a 10% or higher down payment, you will pay FHA mortgage insurance for 11 years.

  1. FHA loan terms may vary by lender

While the FHA sets minimum requirements, individual FHA lenders may have stricter standards. For instance, a lender might set their minimum credit score for an FHA loan at 580 rather than 500. Mortgage lenders determine their own rates and terms. So as with any loan application, it is better to shop around to compare loan offers. Getting a mortgage preapproval from different lenders will help you see the total cost of a loan, along with FHA closing costs, as well as other fees.

Would you like to know more about FHA home loans? Then, ask an FHA-approved lender. And once all your doubts are cleared, apply for the loan today!

 

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