It can be difficult to buy a home if you are dealing with some financial challenges. The truth is that, in some cases, buying a home can be a cheaper and better option than renting. If you have financial challenges but have never purchased a home, then you have a lot more options than someone who has previously owned their own place. One of the most popular programs out there for a person who is a first-time homebuyer is the federally backed FHA loan. There are a few really good reasons you should consider this option if your circumstances are less than perfect with your employment or financial situation.
Less-Than-Perfect Credit Is Not a Disqualifier
The first worry of first-time homebuyers is usually their credit situation. Maybe people are denied bank loans for low credit scores or problems on their credit history. For an FHA loan, which is federally insured, you are able to qualify with a score as low as 580. Most banks won't even consider someone with a score under 700 unless they have significant assets to back up the loan. In an effort to get people into homes and out of the renting cycle, the government has lowered the burden in this area. It doesn't mean that your debt-to-income ratio couldn't potentially prevent you from qualifying, however.
Less Money Down Is Not Necessarily a Problem
You've probably heard that for most home loans, it's recommended to have 20-30% to put down. That isn't the case with this government-backed loan. The only requirement is 3.5%, which is a much more reasonable requirement for people with smaller incomes and less money in savings. If you have more money for a down payment, this can reduce your insurance costs in the future.
There Isn't Upfront Mortgage Insurance Costs and Low Interest Rates
In addition to the lower down payment, you can expect to get a very competitive interest rate. This will help you save money over the course of your loan. A low interest rate can end up saving you thousands by the time you've paid off your mortgage. You will also have to pay mortgage insurance premiums, which are typically more affordable with FHA loans. There is a small upfront premium with the purchase of the home, and then you will pay an annual premium. This annual premium can be built into your monthly payment.
There are few things as wonderful as owning your own place. Not having to pay rent and waste your money by paying someone else to get wealthy is a good way to live. A home can be a safe place for your family, and it can be a very great way to invest in your family's future. If it's your first home and your circumstances aren't perfect, then talk to an FHA loan lender about going ahead with a loan.Share