Why So Many People Prefer FHA Loans Over Other Options
People with high income and perfect credit have no trouble qualifying for mortgage loans, as these are the factors that banks look for when approving applications. What about people that do not have perfect credit histories or people with spotty finances? People without perfect credit, income, and finances often turn to FHA loans. FHA loans are popular because they are ideal for almost anyone, and here are some of the top perks these loans offer.
Looser Credit Score Requirements
One difference with loan types you might notice is the credit score requirements of each. Some loan types require high credit scores, and they will not approve people who do not meet these requirements. FHA loans are different, though. You do not need spotless credit to be eligible. Instead, you might qualify if your score is as low as 500. Lenders set credit requirements themselves, so you might notice that lenders have different rules. If you shop around, you might find a lender willing to approve your loan even if your score is low.
Lower Down Payments Accepted
The second perk of FHA loans is the lower down payment requirements. Again, lenders set rules for the down payments they require, but most will approve loans without large down payments. You might qualify with a 3% down payment. Other lenders might require more. Some lenders base the down payment rules on credit scores, so people with lower credit scores might need higher down payments.
Competitive Interest Rates
Another positive feature of FHA loans is competitive interest rates. The interest rate you pay for your loan affects your mortgage payments and other things. If you want to save money on your loan and have lower mortgage payments, you can shop around for a loan with the lowest rate. Fortunately, FHA loans offer great interest rates. The rates offered through FHA loans are often the same as the rates you can get through other loan programs.
Overall Easier to Qualify For
Many people find that qualifying for FHA loans is easier than other loan programs. As a result, many people turn to these mortgages when they want to buy homes. If you do not think you are eligible for a mortgage due to your credit or financial situation, talk to a lender. You might be surprised to learn that you qualify for an FHA loan, even if you do not qualify for other loan types.
For more information on FHA mortgage loans, reach out to a local lender.