FHA Mortgages

As a first time home buyer, finding your dream home is important, but what’s even more important to a home owning novice is finding the right mortgage to finance your new home. One good option for a first time home buyer is an FHA mortgage. An insured loan by the Federal Housing Administration makes it easier for homebuyers to receive a mortgage. The FHA also provides protection for lenders against homeowners defaulting on their loans.
What makes an FHA insured mortgage most appealing to a first time buyer is the fact that it only calls for a down payment of 3 to 5 percent. What makes this even better is that this down payment does not necessarily need to be secured as the homebuyer’s own money; it can come to the borrower as a gift or grant. Closing costs are also low, usually 2-3 percent, and can be financed into the mortgage itself and paid off over time. FHA loans also have no mortgage value cap, leaving little to no restrictions in regards to borrowing for the borrower, allowing him/her. This allows for the homebuyer to have very little money in their his/her pocket to move into the home of their his/her dreams.

Overall, FHA requirements are quite lenient when compared to other mortgage guidelines. Past credit history is looked at, but isn’t as pertinent as it is in other mortgage loans. In order to qualify for an FHA mortgage, your estimated monthly mortgage payment must be less than 29 percent of your monthly income. Long term debt like credit card and car payments do factor into your qualification—, these payments along with your newly acquired monthly mortgage payments cannot be more than 41 percent of your total monthly income. A mortgage insurance premium is also needed to ensure the new loan will be paid if the owner defaults, but this can also be financed in the mortgage. These requirements may seem rigid but they are actually quite flexible when compared to other mortgages.

An FHA mortgage can be perfect for a first time homebuyer. Lenient stipulations for one’s credit history and the low amount of money that is needed to be put down, combined with the typically low closing costs, allow a first time homebuyer the privilege of buying a home that might have been out of their price range if they had gone through a lender without being FHA insured.

The low down payments, easy credit qualifications, and low closing costs of an FHA mortgage makes it the ideal mortgage for the homebuyer looking to find their his/her dream home without breaking the bank.

The preceding information has been provided by the White Picket Fence Home Buying Institute. For more help on mortgages and home buying, or for a free guide on mortgages, visit http://bit.ly/wpfnjmortgages1.