30 year FHA mortgage loans have become rather popular due to the long-term financing that it has to offer and the much lower interest rates that are associated with them. Not to mention, credit and income requirements are a lot more flexible than traditional mortgages as well.
How 30 Year FHA Mortgage Loans Work
To obtain this type of home loan, you’ve got to be financed through an FHA-approved lender to ensure that you have access to this option. As far as down payment requirements are concerned, you can pay as little as 1.5% whereas going with another type of mortgage would require at least 3%.
The main difference when you go with FHA mortgage loans is that you’ll be required to pay FHA mortgage insurance to ensure that the lender is protected if you default on the loan. This means that you’ll be paying for an upfront insurance premium as well as the annual premium.
If times get rough, there’s a lot of flexibility as well to help protect you from losing your home. Homebuyers that may not have the best credit often find this to be the best option that’s available to them since the FHA has made it easier to finance the purchase of a new home. Not to mention, having 30 years to pay it off means that monthly payments are affordable as well.
The Benefits of a 30 Year FHA Mortgage Loan
Your curiosity is surely peaked by now, and FHA loans may sound like a great deal. We’re not done yet, here are some of the top benefits you can embrace by going this route.
· A credit score of only 500 is necessary.
This is much lower than the requirements of mortgage that aren’t backed by the FHA which means more people have found themselves to qualify for FHA mortgage loans when they might not have been approved for one that’s offered directly by the bank.
· Loans are available to finance the purchase as well as renovations.
Sometimes there comes a deal where you might have to fix the home up in exchange for buying it at a cheaper price. The FHA has loans specific for when this needs to be done so that you can get the money to make the purchase as well as renovate the property.
· You won’t have to pay a hefty down payment.
This is why first-time homebuyers usually consider this route aside from the flexibility in credit requirements. With only requiring half of what a conventional mortgage requires, it makes owning a home as affordable as it can get.
Often this is a great choice for those who haven’t had a chance to start building their credit or that have experienced setbacks in the past. The FHA provides lenders with the assurance they need to be more flexible in the home loans that they provide. Whether it’s for you or not will be something that you’ll have to answer.