Getting a good deal on mortgage or refinance with bad credit can be a challenge – yet an FHA home loan has been a popular solution for bad credit borrowers for some time.
Why should you consider an FHA home loan?
Low Down Payment
With an FHA home, the lender will require you put only 3% of the loan amount as a down payment, on either a purchase or refinance. A typical bank would ask for at least 10% to 20% down, making it nearly impossible for most families to afford. Also, it's very common to have the 3% down payment paid by the seller in many cases, especially when you find a motivated seller. You've been surprised how easy it is to negotiate this!
For example say you find a house listing at $ 150,000, you can make an offer at full price contingent on the seller paying the 3% or $ 4500 to cover the FHA down payment.
No Minimum Credit Score
Perhaps the best feature of an FHA home loan is that there is no minimum credit score to qualify. This swings the door wide open for many families to buy the house of their dreams. FHA will still consider your loan even if your FICO score is low because of missed bills in the past.
Remember any 30-day lates are reported to the major credit Bureaus which stay on your credit report for 7 years.
Good news! To qualify for an FHA home loan you need to demonstrate that you've been a responsible credit holder for at least two years. Even then, a few 30 day lates will not disqualify you in most cases.
Competitive Interest Rates
FHA loans will cost you less because interest rates are very competitive – many times even lower than bank offered interest rates on 30 year fixed loans.
FHA is committed to helping borrowers with past credit issues to get the best mortgage deals possible. Take advantage of this by visiting the website below to find lenders that specialize in FHA home loans.