Thoughtful Ideas On Knowing If You Are Qualified For FHA Loan In Texas
Buying a home can be difficult in this economy. The reality of the situation consists of home prices that keep going up and up. Those who are stuck in apartments, or their parent’s house, often feel discouraged by the high price of homes. If you’re a millennial reading this, yes, your parents had it easier. The price of a typical home in a cheap, suburban area used to be $47,000 in 1980. Now, the same home will cost around $110,000. Because of this, it’s time to be aware of your mortgage options. What are the different types of home loans is the first thing you should know.
The government doesn’t want us to be homeless. While it can seem to be the opposite sometimes, they want as many Americans housed as possible. That’s why they’ve created a program that doesn’t rely on veteran status, area, or disability to qualify for. The Federal Housing Authority created the FHA loan to help Americans purchase homes when they could not otherwise.
There are several things taken into account when you are being assessed for qualification especially if it’s your first time buying your first home in Texas. Not everyone can get an FHA loan. Those who can consider taking advantage of it as it has some extreme financial perks. Here are the qualifications for an FHA loan:
- The property must meet HUD housing guidelines
- The loan you are taking out is for your primary residence (It Can’t Be Used To Buy A Beach House)
- You need to have been employed for the last 2 years.
- This loan cannot be taken out if it has been 12 months to 2 years since you declared bankruptcy. The amount of time depends on the circumstance.
- You must wait 3 years if you have had a house foreclosed on.
- You cannot have debt payments that will exceed more than 43% of your income when it is combined with the mortgage.
- Your income must be verified.
What’s The Main Perk?
What do you need to qualify for a home loan? People who meet the standards for an FHA loan often decide to take advantage of it for the low cost of the down payment. Conventional loans, also called Fixed-Rate loans, almost always require a down payment of at least 20%. This is unrealistic to meet for a lot of families. Because of this, the government has made it possible for people to get homes who can only meet a smaller down payment. The FHA offers two different options for down payments. These are not options that are chosen by you. They are assigned based on your FICO score. This is your credit score. The down payment is assigned this way:
- Those with a score between 500 to 578 will need to put down 10%
- Those with a score of 579 or above will only have to put down 3.5%
While it may seem unfair that those who are in a better financial situation pay a smaller down payment, the government wants to make sure they get paid. This loan still has a smaller rate than a fixed-rate loan if you have a poor credit score.
An FHA loan cannot be taken out by someone who is intending to buy a home to flip it. This mortgage was designed for those who need a home to live in and cannot afford one through any other method. That is why homes being purchased through this program have to meet HUD housing guidelines. It prevents loans from being taken out on fixer-uppers.
There is typically a limit on the value of the property. This limit varies by area. The Federal Housing Authority is well aware that homes cost more in New York City than they do in Houston. Those who are looking to purchase in their area should look up the amount limit for the property they are intending to buy.
Is It Right For You?
You should speak with a financial adviser to discuss which loan is best for first time home buyers. It may be necessary for you to enter into this type of loan to purchase a home. This is a wonderful opportunity for people who cannot afford a home any other way. This loan is not designed for the wealthy. It is meant to help everyday people live the American dream. It may be the perfect option for you.