Are you interested in owning a home, but are unsure about your eligibility and how you will finance such a major purchase? FHA loans offer moderate qualification requirements and a lower down payment, which make them a great loan option for people seeking home ownership. The loan specialists at Foundation Mortgage work with home buyers in Knoxville, Maryville, Lenoir City, Oak Ridge, and Gatlinburg, Tennessee to ensure great FHA Loan rates. Contact our office today for a consultation.
FHA loans are backed by the federal government and are considered non-conventional mortgages.
After the Great Depression, the Federal Housing Administration was formed in 1934 to help revive the economy and stimulate the housing market after the downward shift in the economy. FHA loans helped home buyers by insuring loans through private lenders, allowing lower income families to qualify for a home. Even though the requirements for FHA loans have changed over time, they continue to help pave the way to home ownership for qualified home buyers. Because of their relaxed eligibility requirements, FHA loans are prevalent among first-time home buyers. Many homeowners choose to use an FHA loan to purchase their home initially, then refinance their home later on for a loan with a lower interest rate.
FHA loans offer many benefits to home buyers, and two of the major benefits are that the credit score requirement is moderate and the down payment can be lower in cost. Additionally, if you are unable to afford a down payment, it can be gifted by a separate contributor, like a member of your family, a friend, etc. and FHA loans offer opportunities for special renovation projects and refinancing options.
FHA Loan Requirements
In order to apply for an FHA loan, you need to meet certain eligibility requirements. Typical qualifications include:
- Credit Score – If you have a credit score of 580 or higher, you could secure a 3.5% down payment
- Property Requirements – With an FHA loan, the property you purchase must be your primary residence and the home must meet certain safety and structural requirements
- Debt-to-Income Ratio – You will need to provide proof of steady income and demonstrate the ability to make your mortgage payments. To secure an FHA loan, a debt-to-ratio (DTI) of 43% or less is required
- Mortgage Insurance – Mortgage insurance must be paid until 20% of the loan has been paid off. The higher your down payment is, the less you will have to pay overall towards mortgage insurance costs
FHA Loans: A Path Towards Affordable Home Ownership
If you are looking for a home in Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee, Foundation Mortgage can help, whether you are a first-time home buyer or looking to refinance a current FHA loan. Contact our office today for more information.