Are you struggling to get a conventional, USDA, or VA loan for your dream home in Cherokee County? Don’t give up just yet! FHA loans may be the answer you’re looking for. These loans have more relaxed credit requirements and lower down payment requirements, making them popular with first-time homebuyers with little savings or credit challenges.
But before you decide to get an FHA loan, there are a few things you need to know. FHA loans are mortgages insured by the Federal Housing Administration and can be issued by approved lenders, such as banks, credit unions, and non-banks. FHA loans can be used to buy or refinance single-family homes, multi-family homes, condominiums, and certain manufactured homes. They can also be used for new construction or renovation of an existing home.
FHA Loans vs. Conventional Loans
Compared to conventional loans, FHA loans allow lower qualifying credit scores and may have lower monthly mortgage insurance. They also have more liberal rules regarding gifts of down payment money from family, employers, or charitable organizations. However, FHA loans may involve closing costs that are not required by conventional loans.
Qualify for an FHA Loan
To qualify for an FHA loan, you’ll need to meet certain criteria, including a down payment of 10% with a credit score of 500-579, or a down payment of 3.5% with a score of 580 or above. You’ll also need a verifiable employment history of two consecutive years and the house must be used as a primary residence only. You’ll need to pass an appraisal by an FHA-approved appraiser and meet HUD guidelines. You’ll also need a front-end debt ratio of a maximum of 31% and a back-end debt ratio of no more than 43% of gross monthly income. Additionally, there is a two-year wait before applying for the loan after bankruptcy or three years after foreclosure.
FHA Pros & Cons
While there are definite pros and cons to buying a house with an FHA loan, it can be a great way for first-time buyers with less-than-stellar credit to get into homeownership. If you’re considering an FHA loan, be sure to contact an experienced Cherokee County agent who can guide you through the process and help you find qualifying houses. Don’t hesitate to reach out to us at 770-280-4560 when buying a house is on your horizon.
To help you get an even better handle on buying a house with an FHA loan, let’s see how FHA loans differ from conventional loans.
The Atlanta Team That Can Help
FHA loans are very attractive and a great way for first-time buyers with less than sterling credit to get into home ownership. There are, however, some fairly extensive qualifying criteria, as well as definite pros and cons that must be taken into account. So how do you determine whether an FHA loan is right for you? Our team of experienced Atlanta agents can help. They can help your find qualifying houses and guide you through the process. When buying a house is on your horizon and you’re considering an FHA loan, be sure to contact us at 770-280-4560.
FAQs
Q: What is an FHA loan?
A: An FHA loan is a mortgage insured by the Federal Housing Administration. It is designed to help first-time homebuyers who have little savings or have credit challenges, with a minimum 3.5% down payment for borrowers with a credit score of 580 or higher.
Q: Who can issue an FHA-insured loan?
A: Only FHA-approved lenders can issue FHA-insured loans.
Q: What types of properties can an FHA loan be used for?
A: An FHA loan can be used to buy or refinance single-family houses, two- to four-unit multifamily homes, condominiums, and certain manufactured homes.
Q: How do FHA loans differ from conventional loans?
A: Conventional loans are not insured or guaranteed by the federal government, while FHA loans allow lower qualifying credit scores and sometimes lower monthly mortgage insurance. FHA rules are more liberal regarding gifts of down payment money, but FHA loans may involve closing costs that aren’t required by conventional loans.
Q: What are the qualifying criteria for an FHA loan?
A: Qualifying criteria for an FHA loan include a down payment of 10% with a credit score of 500-579, or a down payment of 3.5% with a score of 580 or above, a verifiable employment history of two consecutive years, and the house must be used as a primary residence only. Borrowers must also pass an appraisal by an FHA-approved appraiser and meet HUD guidelines, have a front-end debt ratio of a maximum of 31%, a back-end debt ratio of no more than 43% of gross monthly income, and have a two-year wait before applying for the loan after bankruptcy or three years after a foreclosure.
Q: What are the pros and cons of an FHA loan?
A: Pros of an FHA loan include a lower credit-score requirement, relatively low down-payment requirement, and the opportunity to stop renting sooner. Cons include mortgage insurance requirements, eligibility requirements for a property, an APR often higher than with conventional loans, and FHA loans being available only through FHA-approved lenders.
Q: How can the Cherokee County team help with an FHA loan?
A: The experienced Townsend Realty Group agents can help find qualifying houses and guide buyers through the process of buying a house with an FHA loan. Contact the team at 770-280-4560 for assistance.
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