Do you have as low as 500 credit score? Are you thinking you can’t qualify to buy a home in Texas? Don’t give up hope. The Federal Housing Administration (FHA), a government agency, allows low to moderate-income borrowers to get a home loan even with a low credit score and insures their loans. Though the FHA insures the loan, it is approved by FHA-approved mortgage lenders. But it will not be difficult for you to buy a dream house for your low credit score.Although there are lenders who offer FHA loan 500 credit score Texas, are you still in doubt? Are you still wondering can the loan program help you in the long run? What are the advantages of opting for this loan program? To declutter your mind, here, we have put together various benefits of this loan program.
- Low credit score
Homebuyers with less-than-perfect credit can often qualify for an FHA home loan program. Even if you have a bankruptcy in your history, you can still qualify for this loan. If your credit score is as low as 500, you can still get the loan but within certain guidelines. And as FHA-arrowed lender can finance multi-family homes, condos, and manufactured homes.
- Low down payment
Conventional lenders usually require a 20% down payment, but it is not so when you choose an FHA loan. FHA-approved mortgage lenders can offer an FHA loan with as little as 3.5 percent down payment. You pay the FHA to insure your loan but the overall costs can be lower. Moreover, you can get the money for your down payment as a loan or gift from a family member, charity or employer. But you need to ask your lenders before doing so.
- Better interest rates
FHA loans offer the same interest rate for all kinds of borrowers. Therefore, there is no interest rate penalty for those who have credit issues. When you will qualify for the loan, you will get the current rate. Generally, FHA loan rates are very competitive, typically within 0.05 percent of conventional rates charged to the well-qualified borrowers. These loans offer credit-challenged buyers the ability to qualify at rates they could not get on conventional mortgages, once the conventional rate is adjusted upward for risk.
- Lower mortgage insurance
Lower mortgage insurance is another reason for which you would like to opt for this loan program. In most of the cases, the monthly mortgage insurance fee paid on an FHA loan is lower than the fee paid on a conventional mortgage. This results in an overall lower monthly payment, even for the ones, who can qualify for a conventional loan.
- Helps to avoid foreclosure
The Making Home Affordable Program (MHA) is a government initiative to help borrowers who are suffering a financial setback. Are you in default on an existing mortgage? MHA can help you with this by reducing your loan payments and avoiding foreclosure. There are other options too that will assist unemployed homeowners and the ones who are “underwater”. It means you owe more on your mortgage than what your home is currently worth.
After going through the various benefits that come with an FHA home loan, you would surely like to opt for this loan program, especially when you have a low credit score. Then, without waiting any more, take the right step soon.
Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.