If you want to buy a home but don’t have 20% down or perfect credit. No worries!!
With a credit score of 580 or higher and just a 3.5% down payment, you can buy a primary residence with an FHA mortgage with a low 30-year fixed rate loan. With lower credit score and down payment requirement, FHA mortgages have some of the easiest qualification requirements allowing more home buyers to qualify for an FHA loan.
An FHA loan is a mortgage which the Federal Housing Administration (FHA) insures. Established in 1934 during the Great Depression, FHA is a government agency that provides mortgage insurance that backs the loan in case of default. This allows lenders to offer loans with lower down payment and credit requirements at very competitive rates, often lower than conventional loans. First-time homebuyers and move-up buyers frequently turn to FHA loans for their financing needs. These loans are offered to returning homebuyers too. FHA charges an upfront mortgage insurance premium and a monthly mortgage insurance fee, this is used to insure all FHA loans for any loss resulting from a foreclosure. Think of FHA as a huge insurance company for all FHA mortgages insuring the loans against loss from foreclosure. With many of these mortgages being outside of the guidelines for a conventional loan or other types of government-insured mortgages, this opens the door to homeownership for many buyers that wouldn’t qualify for other loan types.
3.5% Down Payment.
Less restrictive credit requirements.
The seller can pay closing costs up to 6% of the sales price, which is more than enough to cover all closing costs.
Outstanding interest rates, 15 or 30-year fixed, many times lower than a conventional loan rate.
Gift funds allowed for down payment.
FHA loans are assumable.
No Income limits.
Allows higher debt to Income ratio vs. conventional loan.
Non-occupying co-signers allowed.
Based on a $150,000 Loan, 30 Year Fixed Rate of 4.5%
Principle and Interest $760
Home Owners Insurance $50
Real Estate Taxes $100
Mortgage Insurance $106
Total Monthly Payment $1016
The following FHA loan limits apply to most of southwest Virginia including Roanoke, Christiansburg, Blacksburg, Radford, Wytheville, Marion, Abingdon, Bristol, and surrounding areas.
Limits increase as high as $726,525 for a 1-unit home in high-cost areas of Virginia.
You can use an FHA loan to refinance your home to get cash-out for any reason including home repairs or paying off debt.
To qualify for an FHA loan, you need to meet a few basic requirements:
3.5% Down Payment.
580 or higher credit score
Debt to income ratio of 43% or less, in some cases DTI can be 57%.
Steady employment for at least the past two years.
FHA loans are available for primary residences only, not second homes, or rental properties.
Bankruptcy must be discharged at least two years; some exceptions apply for 1 year from the discharge date.
3 years since a foreclosure.
It is not too hard for most customers to qualify for the FHA loan program. It was designed with flexibility in mind so that even first-time homebuyers with limited credit, employment histories and financial means for a down payment can purchase a home.
With offices in Blacksburg, Marion, and Abingdon we provide home loans to all of Southwest Virginia including Christiansburg, Roanoke, Wytheville, Bristol, and the surrounding areas.
First Residential Mortgage Corporation is an Equal Housing Lender. As prohibited by federal law, we do not engage in business practices that discriminate on the basis of race, color, religion, national origin, sex, marital status, age, because all or part of your income may be derived from any public assistance program, or because you have, in good faith, exercised any right under the Consumer Credit Protection Act. Disclaimer: Programs subject to change without notice. All borrowers must qualify per program guidelines.