When you’re shopping for a home, you need to figure out what type of mortgage will be most suitable for your needs. One type of home loan you might be considering is an FHA loan insured by the Federal Housing Administration (FHA).
This type of mortgage has many benefits which make it an excellent option for homebuyers with a variety of financial situations and goals. But is it the right choice for you? Following are some circumstances where an FHA loan might be ideal.
1. You are a first-time homebuyer or a repeat homebuyer.
FHA loans are commonly promoted to first-time homebuyers. This is because people who are shopping for their first homes may share a number of the financial circumstances which are listed below. As FHA mortgages are tailored to borrowers in those situations, they can be the loan of choice for purchasing your first home.
But an FHA mortgage may also be the right choice for you if you are a repeat homebuyer. This is something which fewer borrowers are aware of, believing mistakenly that FHA mortgages are only for first time homebuyers. But for many repeat homebuyers, they are still the top choice.
2. You cannot afford a large down payment.
Whether you are shopping for your first home or not, if you cannot afford a large down payment, an FHA mortgage is one of your best options for moving into a home now. If your credit score is above 579, your down payment can be just 3.5%. You are also allowed to use gift funds for the down payment. Furthermore, the seller can pay the closing costs if you purchase a home with an FHA loan. This can help you save even more money as you move into your new home in Virginia.
3. You can afford to pay for private mortgage insurance (PMI).
There is, however, a price for the convenience of FHA mortgages. This takes the form of a requirement to purchase private mortgage insurance (PMI). As this is a monthly bill, you need to run your budget and figure out whether you will be able to afford it once you move into your new home.
4. Your credit score is not perfect and/or you need a co-signer.
Credit score requirements for FHA mortgages are designed to make it easy to qualify for a home loan. This makes FHA loans ideal for borrowers who might not qualify for the same interest rates and terms if they applied for different types of mortgages. Likewise, your debt-to-income (DTI) ratio does not need to be as low to qualify for an FHA loan as it would be to qualify for other mortgages.
Another great thing about FHA mortgages is their flexibility with regards to co-signers. You can have someone co-sign on your loan with you, but they do not need to live in a house with you.
If you do have a high credit score and/or you can afford a large down payment, you might want to check into different types of loans which do not require you to pay for PMI. You might, for example, be better served with a conventional home loan. This is something we can help you figure out during your mortgage consultation.
Apply for an FHA Loan in Virginia Now
For many borrowers who do not have perfect financial metrics or who cannot afford high down payments, FHA mortgages can make homeownership affordable immediately. If you think that an FHA home loan may be right for you, you can apply now by calling (540) 838-5868.