Buying a home with a low down payment and easy qualifications is possible when you apply for an FHA loan.
This type of government-backed loan is a favorite for first time homebuyers in Arizona as well as returning homebuyers.
What is an FHA Mortgage?
An FHA mortgage is a loan that is backed by the by the Federal Housing Administration. Lenders face less risk when the FHA insures a loan, so they are able to loosen their requirements for qualification and reduce the rates they offer borrowers.
Benefits of FHA Loans in AZ
When you apply for an FHA mortgage, you will be able to partake of the competitive advantages of this loan program:
- You can qualify even without perfect credit.
- You could make an affordable down payment on your new home.
- If you are approved for a low down payment, you can buy your dream home immediately (with a higher requirement, you might have had to wait).
- Your rates may be more competitive than they would be for some other types of financing.
- Low closing costs are guaranteed. There are also scenarios where you may not have closing costs to pay.
- With fixed and adjustable rate formats and multiple loan terms available, tailoring an FHA loan to your needs is easy.
- FHA mortgages are available for home purchase, construction, renovation, or refinance. Debt consolidation is possible as well.
The reason FHA mortgages are the loans of choice for many borrowers shopping for their first homes is because those borrowers often do not have the ability to put 20% down on a home, and may also not have the strongest credit scores.
But if you are a repeat homebuyer with a similar financial scenario, an FHA mortgage might be just as ideal a fit for your needs.
Do You Qualify for an FHA Mortgage?
Here are the requirements you need to meet for an FHA loan:
- You need a credit score of at least 580 to qualify for the lowest down payment amount. But you can still qualify for an FHA mortgage if your credit score is 500 or above.
- You need a debt-to-income ratio of around 43-45% or below.
- You must currently be in a steady job, and must be able to prove that you have been on a consistent career path over the past two years minimum.
- Another requirement is a clear Credit Alert Verification Reporting System (CAIVRS) record.
- If you declared bankruptcy, a 12-24 month waiting period is necessary prior to applying for an FHA mortgage.
- If you were foreclosed on, a 3-year waiting period is necessary prior to applying for an FHA mortgage.
- FHA mortgages are only available for the purchase of homes that will be primary residences. Second homes are not eligible for this type of financing, nor are investment properties.
- The home must have been constructed on or after June 15th, 1976 on a permanent foundation.
What types of homes can you buy with an FHA loan? Options include a single-family home, a 2-4 unit multifamily home, or a HUD-approved condo.
During your consult, you can find out if you meet the FHA loan requirements, as well as go over other types of flexible loan options that may be available to you.
Apply for an FHA Loan in Tempe or Beyond
With an FHA mortgage, it is easier than you think to qualify for a competitive home loan. If you are ready to begin please contact Misty Garrison at (480) 618-5358 to schedule your consultation.