Want to Get an FHA Loan with 500 Credit Score: 4 Things That You Should Know

 

Do you want to apply for a home loan program to buy a home? Is your credit score as low as 500 and so, you are wondering how to qualify for a loan? Well, not to worry. With an FHA home loan program, a borrower with less-than-perfect credit can qualify for a home loan program and fulfill his or her dream of homeownership. Even if you have a history of bankruptcy, you can still have a shot at qualifying. 

Insured by the Federal Housing Administration (FHA), a government agency and offered by an FHA approved lender, this loan program can help you buy multifamily homes, condos, and manufactured homes. As there are several lenders who offer an FHA loan 500 credit score Texas, you can easily opt for a reputable lender and apply for the loan. But before you do so, it is important to know a few things about FHA loans. Here it is – 

  • · FHA loan permits a low down payment 

The traditional home loan program needs a 20 percent down payment. But the thing is different when it comes to an FHA loan. When you apply for an FHA loan from an FHA-approved lender, you will get the approval with as little as 3.5 percent down payments. You can still pay the FHA to insure your loan but the overall costs can be lower. Besides, you can get the money for your down payment as a loan or gift from your near or dear ones, employer or charity. Most conventional lenders will not agree with this.

  • · FHA loans have lower interest rates 

Along with lower down payments, FHA-guaranteed home loans generally have lower interest rates. As the FHA does not actually provide the financing or decide the interest rates of the loans it backs, the rate that you will pay for an FHA home loan program will be negotiated with an FHA-approved lender. 

  • · FHA loans can help you avoid foreclosure 

The Making Home Affordable (MHA) program helps borrowers, who have financial setbacks. If you default on an existing mortgage, NHA can help you to reduce your loan payments as well as avoid foreclosure. Besides, there are options to assist unemployed homeowners and homeowners who owe more on their mortgage than what the house is currently worth. 

  • · An FHA loan can help disaster victims 

You never know when a disaster is waiting for you. Disasters, such as landslides, floods, tornadoes, earthquakes and all the rest, can occur at any point of the time. If your home is ruined or damaged by a disaster, you will be in quest of a way to recover from the situation. The FHA Mortgage for Disaster Victims program offers 100 percent financing. And it is done through approved lenders for the buying or reconstruction of a house that is severely damaged or destroyed due to a disaster. 

Now, you can understand that choosing an FHA loan for buying a home is advantageous for you, especially when your credit score is as low as 500. So, what to wait for? Opt for an FHA-approved lender and apply for the loan today!

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.