First time home buyers represent a large population in the United States and many can experience trouble when trying to become a homeowner for the first time. For some it’s the lack of credit that they have built up due to being early in their careers and just graduating from college. In our economy today it can also be the lack of a job being held for many years as proof of stability and of course the insufficient funds for a down payment do not help either. FHA loans for the first time home buyer can be the answer to all of these issues. FHA requirements are more lenient with credit, years of employment, and the down payment requirement is only 3.5% of the house’s sale price. In addition FHA regulates the closing costs.
For some not owning a home is due to their previous credit history. FHA loans for the first time home buyer can be the way out of renting and into home-ownership. FHA mortgages require a lower credit score, usually accepting as low as 620. FHA home loans also will accept a person after 2 years of declaring a bankruptcy (if the person’s credit since has been acceptable) and after three years of a foreclosure (if credit is in tip top order since the date of the foreclosure). Conventional mortgage loans are not usually allowed to accept low credit scores, and surely will turn down people with bankruptcies and foreclosures in their past.
FHA loans for first time home buyers also have the advantage of putting the home insurance into the FHA mortgage so that this premium becomes part of the monthly house payment. The FHA rates for the insurance (1.5%) are lower than what a private mortgage insurance company can give. This is a better situation for a first time buyer because it’s more economical and they won’t have to think about another bill they are not used to having each month since it will be combined.
In the past in some cases it could have been hard to stick to the FHA loan limits especially in certain higher priced areas so FHA loans became a little less popular. Then in the late 1990′s the real estate market rose, and the FHA limit of $625,500 for some areas was now really out of the question. In 2009 a bill has been passed to allow the limit for FHA loans to be $729,750. This will allow more people to be able to look toward FHA loans for the first time home buyer. First time home buyers should look at this as an opportunity being created for future home ownership.
Sandy Sarconi writes real estate articles when he is not pulling into tubes in LA. This year his articles focus on FHA refinance down payment assistance and FHA mortgage news that matters.
