Many consumers in the United States remain renters. A lot of them think that the only way to secure an affordable mortgage for their dream home is through the combination of an excellent credit score and making a down payment of at least 20% of the value of the property.
While it is true that people with these two qualifications have higher chances of getting a great deal on their mortgage, it does not automatically mean that you, who do not have these qualities, no longer can. This is where working with an FHA loan lender such as Primary Residential Mortgage, Inc. comes into play.
What FHA is, in the first place
FHA, which stands for the Federal Housing Administration, is a U.S. government agency aimed at facilitating the growth of opportunities for loan applicants. The FHA is not a lending institution; its primary function is to insure the loans that FHA-approved lenders provide to borrowers. Much thanks to this insurance, lenders can afford to make their lending requirements and regulations less rigorous. As a result, they can grant loans even to people with less-than-stellar credit or have little savings for a down payment.
The biggest differences between FHA and conventional loans
Typical conventional mortgages usually require loan applicants to have a good credit standing and the financial ability to make at least a 20% down payment on the home they want to buy. FHA loans, on the other hand, do not have these rigorous policies attached to them. You can qualify for an FHA-insured loan even when your credit does not qualify as excellent, or when you can only put down a small amount for the purchase.
With as little as a 3.5% down payment on an FHA mortgage, you can already qualify for a low-rate loan that can finally pave the way for you to take that step to home ownership. Just remember though: work only with a lender approved and licensed by the Federal Housing Administration.