Purchasing the first home can be a daunting and exciting experience at the same time. As the first-time homebuyers are usually short on cash, there are various financing options available for them. There is nobody to judge your crucial financial situation – everyone needs to start from somewhere. Even if it is the bottom and you have poor credit scores, there is a reason to heave a sigh of relief. The first-time buyers better opt for FHA loan which is a perfect option when they have not-so-perfect credit scores. If you fall into a similar category, be careful about not making one mistake that everyone commits. You should use the FHA loan calculator to understand how much you can afford.
FHA mortgage calculator is a way to calculate how much a borrower can afford. There are certain factors considered to make the calculations. For example, monthly debts, savings for a down payment, and household income are taken into account. When you are going to purchase a home, you need to have a certain degree of comfort to grasp the monthly loan payments. While using the FHA loan calculator Texas, do not forget that there are unexpected expenses. In this way, you can understand pretty well how much you can actually afford. There are many other things that you must keep in mind; hence, take a look below.
Make Use of the FHA Loan Calculator
When you are using this tool, you are calculating monthly payments for the FHA home loan. In this calculation, annual mortgage insurance premium and upfront mortgage insurance premium are included. It is a great way to make a person understand the entire cost of homeownership over the mortgage period. At this time, home furnishing or closing cost is calculated. Hence, along with the one-time expenses, property taxes, HOA fees, and recurring fees are considered.
Understand if You Need FHA Loan
Comparing to other traditional loans, FHA loan is a lot easier to qualify. Once you can prove your credit score to be 500, you can avail 10% down payment. If you have a credit score of 580, you can get a 3.5% down payment. Additionally, the mortgage allows borrowers with a higher debt-to-income ratio. Before you qualify for the mortgage, you should pay extra attention to current debts, credit score, employment status, and down payment. When you have an excellent credit score, you can get hold of a better FHA loan. Also, make sure that you are aware of the FHA loan limits. For example, the FHA loan limit for a single-family home is $765,600 in expensive neighborhoods. In the low-cost area, the limit is $331,760.
While using the FHA loan calculator in Houston, you can also put different scenarios. For example, you can get estimation with a 3.5% down payment and 10% down payment. In this way, you will get a clear picture of how much you can afford. The FHA-backed loan has relaxing standards and the loan is perfect for people with low credit scores. It is better to seek the help of a lender to use the FHA loan calculator in a better way.
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.