Even though the required down payment for an FHA loan isn’t as much as you will need for most traditional loans, it still totals to quite a hefty amount. At the very least, the FHA down payment amount is 3.5%, which is the maximum percentage that the bank will ever loan you. If you are able to be patient, however, saving up the money to use toward the down payment will be your best option.
Your monthly payment amount will also depend on your mortgage type and the amount of loan amount you take out. It is also based on the type of property you have. The lower the mortgage rate you have (the less you are required to pay upfront as down payment), the more you will be able to save on monthly payments. Most FHA loans are based on low mortgage rates. This means that even if you are on the higher end of the loan amount spectrum, you will still be able to afford your monthly payment and avoid foreclosure.
If your credit score is below the national average, you might qualify for a lower interest rate on your FHA loan. The Department of Housing and Urban Development also offers a program that offers incentives to first time home buyers that qualify for lower interest rates through their FHA program. If you are currently in a mortgage and plan on applying for an FHA loan, talk to your lender about getting an approved FHA loan. The lower interest rate you qualify for with your current conventional loan could save you hundreds of dollars over the course of your mortgage. A lower FHA rate also means a lower monthly payment, which can make all the difference when you’re trying to save money.
FHA Down Payment Assistance for Low Credit Scores. If you are currently struggling to make your monthly house payment, you may qualify for financial assistance from the Federal Housing Administration for a lower interest rate for your FHA loan. The Federal Housing Administration or HUD offers different programs to help homeowners with low credit scores achieve home ownership. Some incentives are available to help buyers who qualify for FHA loans but do not have enough income to qualify for conventional financing through their bank, mortgage company, or other third-party lender.
FHA mortgages are much easier to qualify for than conventional loans. Even if you have a poor credit score, an FHA mortgage might be right for you. The FHA guarantees payment on the loan to the borrowers, even if they fall behind on their payments. In addition, unlike other mortgages, an FHA does not require a minimum loan amount. Simply meeting the FHA’s criteria of income and assets guarantees that you will qualify for this special type of loan.
Traditional Mortgages. Mortgages come in both FHA and conventional forms. The difference between the two is the cost of the mortgage. FHA mortgages cost more than both other types. But, they also provide greater protection for borrowers. Most mortgage lenders require borrowers to have at least a 3.5 percent down payment, although some may require less.
FHA mortgages are not only available through traditional mortgage lenders; they can also be found online. A variety of mortgage brokers are available to assist potential borrowers in finding the best mortgage available. These mortgage brokers can make loans to FHA borrowers. However, before you choose to work with a mortgage broker, be sure to understand all the costs and fees involved in these loans.
The recent drop in home prices has created some issues for borrowers who are refinancing their FHA loans. Homeowners who were able to refinance using traditional mortgage insurance are concerned about the effects of the decline in home prices on their monthly mortgage payments. Borrowers who are refinancing with FHA mortgage insurance should also consider the possible impact of falling home prices on their ability to make their monthly payments. If mortgage rates rise again, they may be unable to afford their current levels of interest.