FHA Loans Gaining Popularity
FHA Loans are mortgages issued by lenders and insured by the Federal Housing Administration (FHA). This federal government insurance gives lenders some assurance that they will be repaid if the borrower defaults.
Even with the popularity of this type of loan, many buyers do not understand the potential benefits of these loans. Below, are some frequently asked questions.
Are FHA Loans Only For Low Income Borrowers? The good news is, they are available to everyone. There are no income restrictions. Similar to most mortgage options, borrowers will need to supply proper documentation for income and assets which assures the lender that the borrower will be able to afford the home.
Are FHA Loans Only For First Time Buyers? You could be a first time buyer or buying your 10th home, anyone who would like to apply is able to do so.
Aren’t FHA Loans Just For Small Loans? Recently, the government raised the maximum loan amount from its original cap of $362,790 to $793,750 in hopes that it will help stabilize the housing market. The amount a buyer can borrow might vary county to county, so check with a qualified lender in your area.
Are FHA Loans More Affordable Than Conventional Loans? While interest rates are comparable to other loan options, one of the greatest benefits is that the down payment could be as low as 3.5%.
Are FHA Loans Assumable? Yes! These loans are assumable. While the initial attraction might be the low down payment, the potential to transfer the loan and it’s terms (interest rate) to a buyer might make the property more desirable and possibly increase the value, especially if interest rates rise.
If you’re considering a home purchase, speak with your lender about the possible benefits of a FHA Loan!