If you are trying to file for an FHA loans in Houston Texas, you may wonder what type of credit you will need to obtain one. Although these are reportedly much easier to get than a standard mortgage, there are still some qualifications that you must meet. Some people have relatively low credit, yet they still have the possibility of obtaining one through the Federal housing administration. So how to get an FHA loan in Texas and what are the things you need to consider when applying for this loan?
Let’s look at what type of credit scores the bare minimum that you will need in order to qualify for one of these low interest rate loans.
Why Would You Apply For One Of These Loans?
There are many benefits associated with having an FHA loan. First of all, they are very easy to obtain. Although the credit score may fluctuate from different reports that you may read, people with above-average credit, or even average credit, can qualify. They are also very flexible loans which means you can try to obtain a wide variety of different properties.
Finally, the small down payment is also very helpful for those that are getting their very first home. You can check also what are the requirements to apply for an FHA loan and see if you are qualify for this type of loan.
The Benefits Of Having An FHA Loan
The first benefit is that this loan is backed by the United States government. As far as finding a reputable source for money, you cannot find a better financial backer. Second, you can choose the specific type of loan that you want. These can range from 30 year loans to 15 year loans, all of which will have a fixed interest rate. There are also ARM loans which you may qualify for. In most cases, a credit rating of about 560 will allow you to get in. There are also some drawbacks to getting this type of a mortgage.
Drawbacks Of FHA Loans
The primary drawback is that you are only able to borrow a certain amount of money. This is why it is so perfect for people that are purchasing their very first home. These tend to be single-family dwellings, priced at an average rate when compared to comps in the area. Therefore, the type of housing that you can get is limited, as well as the amount of money that you can borrow, which is why many people obtain one from a traditional bank.
How Long Will It Take To Get Qualified?
The most common question of a person applying for this loan is how long does it take to get an FHA loan. This is an intermittent type of answer. It just depends on your credit score, whether or not you have owned a home before, and how fast the people processing the paperwork can go. Obviously, they are not looking for a lender.
It is going to come from the United States government. Problems can arise in regard to how much money you need to put down with traditional loans, but this tends to not affect how quickly you are approved with FHA loans. In a matter of weeks, usually not longer than that, you should receive confirmation that your loan has gone through.
What Is The Average Interest Rate On FHA Loans?
The average interest rate tends to be right around 3 1/2%. This is the rate, but not the APR, which is typically one percentage point higher. If you decide to get the lowest interest rate, this means that you will be paying on a 15 year fixed loan. The payments are going to be higher, but the amount of interest that you will pay during the life of the loan will be much less by comparison. When you compare this with other lending institutions, this could be a very low rate. However, if you do have a sizable down payment that you can give, and you have great credit, you might be better off with a standard loan from a regular bank.
How Much Money Do You Have To Have Down?
The amount of money that you have to have down will be about 3.5%. This is the amount that you should strive for in order to get the lowest possible interest rate. If you put down less, the interest rate may be higher, but this is something that is often negotiable depending upon who you’re working with. In most cases, people will have that small amount of money to put down and can take advantage of these very low-interest rates.
If you have never applied for an FHA loan before, you may not realize how easy they are to get. As long as your credit score is 580 or above, you should be able to qualify. Additionally, you will need to only have 3.5% down to qualify for the 3.5% interest rate. The low-interest rate is based upon a 15 year fixed mortgage, but it will be a little bit higher if you decide to get a 30 year fixed mortgage instead.
Another thing you need to look into is your income. Sometimes the limits in your income may affect your application. So check what is the income limit for a FHA loan before you proceed with your application.
Overall, this is the best way for people that are getting their first house to take advantage of the low-interest rates provided by the federal government.