FHA mortgage rates are competitive, and the low down payment requirement can assist first time buyers. Here are more tips for funding your first home purchase.
FHA Guidelines, Low Mortgage Rates Benefit First Time Buyers
FHA loan rates are hovering near record lows, and home prices in many regions are not heating up as fast as expected for the busy summer buying season. If you want to buy your first home, the combined benefits of low mortgage rates and home prices are presenting a great opportunity. You may qualify for a larger mortgage than previously possible, which can extend your buying power.
FHA Loans: Low Down Payment and Options for Paying Closing Costs
FHA loans assist buyers by offering a minimum down payment of 3.5 percent. Conventional loans require 10 to 20 percent down. FHA guidelines provide options for paying for closing costs and the up-front mortgage insurance premium (UFMIP) that are due at closing. Most FHA borrowers elect to roll the UFMIP into the loan amount, but you can also pay it in cash along with other closing costs. FHA borrowers can pay closing costs up front or may elect to have their FHA lenders pay closing costs in exchange for higher mortgage rates. Sellers can also pay up to 3 percent of buyer closing costs.
Ask FHA Lenders About State and Community Programs for First Time Buyers
State and local housing agencies may offer "silent" second mortgages or grants for covering all or part of your closing costs and down payment. These agencies supply eligible buyers funds needed for their down payments and closing costs, and record a second mortgage against their homes. These second mortgage often don't have to be repaid until you vacate the home you're buying. Home buyer assistance programs vary; local mortgage lenders can provide details about buyer assistance programs in your area. Although these programs are generally directed toward first-time buyers, other folks may also be eligible.
Compare FHA Mortgage Quotes
Before looking for your next home, gathering several FHA mortgage quotes can help you find the best mortgage for your needs. Make a list of priorities for your new home, and review all three credit reports before applying for a mortgage loan. Having an excellent FICO credit score of 740 or above can help you qualify for the lowest available mortgage rates.
Karen Lawson is a freelance writer with extensive experience in mortgage banking and home loan loss mitigation programs. She holds BA and MA degrees in English from the University of Nevada, Reno.