The Federal Housing Authority ensures an FHA loan, which protects lenders if the borrowers default. The government guarantee makes it possible for a lot of lenders to impose lower standards for eligibility.
By taking an FHA loan from a company, Primary Residential Mortgage, Inc. explains that you will enjoy a lower down payment and better interest rates. Borrowers enjoy many other benefits that would not be possible from other lenders.
Relaxed Credit History Requisite
You don’t need to have an outstanding credit history to qualify. You are eligible if you don’t have any derogatory remarks in your credit report. If you have filed for bankruptcy before, you can apply for an FHA home loan after two years. But, your credit record must be clean from the time the court has declared your bankruptcy.
High Debt Ratios
Even when you have a high debt ratio, you can qualify for an FHA loan. This would not be easy to do when applying for a traditional loan. Conventional home loans will force you to maintain a debt ratio under 36% of your income. You can qualify for an FHA loan even if your debt ratio is as high as 41% of your monthly income.
Higher Contributions from Seller
While sellers in conventional loans contribute a mere 3 percent, seller contribution on an FHA loan is as much as 6 percent. You can request the seller to cover most of the closing cost. This will allow you to save a lot of money on out-of-pocket expenses.
Lower Mortgage Insurance
With an FHA loan, you will pay a monthly mortgage insurance premium that is much lower compared to a traditional home mortgage. Your total monthly payment will be lower too.
These are only some of the main benefits that make the FHA loan program ideal for many home buyers today. With enough support from the federal government, more people can now afford to own a home.