You’ve thought about buying a house – but you’ve got some qualms. That’s normal – but there are simple answers to most of the “complicated” questions in your head. We have a couple of tips and explanations that will hopefully calm your first time home buyer fears – and we’ll introduce you to one of our best friends: the FHA loan.
So first, let’s answer that question in your head: What’s an FHA loan and why is it my friend?
An FHA loan is very similar to a conventional loan, but with some perks that make it ideal for a first time home buyer, young people without established credit history, or anyone whose credit is challenged. Here’s what you need to know:
- An FHA loan is insured by the Federal Housing Administration. This basically means that the lender is protected should you not be able to make payments, which makes it ideal for those who don’t have a long credit history. This makes it a lot easier to qualify for an FHA loan than a conventional loan, because the insurance is guaranteed throughout the lifetime of the loan.
- FHA usually requires a 3.5% down payment. This is lower than the usual 5% in conventional loans – which leaves you a little extra to cover closing costs and leave in reserve for those first couple months in your new home.
- It qualifies more buyers, but uses the exact same process as a conventional loan. So when you ask us about FHA loans, you get the exact same treatment as a conventional loan. You’ll still need to show you can make payments, etc. And you’ll still get a great loan. What we love about the FHA is that it makes it possible for more people to get started – and end up in the home of their dreams.
Knowing an FHA is an option is like a good deep sigh for a lot of people. And we’d be happy to answer your questions about your FHA options if it interests you!
If it’s your first time applying for a loan, here’s a few things to keep in mind:
- Check your funds! Make sure all your payment history is in order, and start putting aside money for your down payment, closing costs and reserves for unexpected emergencies. Even if you don’t expect anything to happen, lenders like to see that you’re prepared.
- Avoid big changes. When you’re applying for a loan isn’t the best time to switch jobs, buy a car, etc. Lenders look for consistency – your ability to make payments and stay in a home.
- Don’t close your credit cards! Keeping a consistent line of credit is important. Even if you have the ability to pay out of pocket for much, it’s important for you to keep some kind of credit or payment that a lender can check.
There’s not as much for you to worry about as you may have thought! We hope these quick explanations and tips helped – and if you’re looking to work with a lender who values the same things you do, faith and family – give us a call! We’d love to help you get that perfect first home.
Best,
Audrey
The Christian Mortgage Mom
