FHA Loan Benefits
In the 1930s, the Federal Housing Administration (FHA) set up a program meant to help people suffering from the Great Depression and simultaneously stimulate the American economy. With very different borrowing requirements, the FHA loan program made it so people who couldn’t before gain access to mortgages could make their home dreams a reality.
Lower Credit Requirements
This is, for many borrowers, the most notable of the FHA loan benefits. A credit score lower than 620 usually means a quick “no” from a conventional mortgage lender.
With the Murfreesboro FHA loan program, you can have a credit score as low as 500 and still get a loan.
Lower Down Payment Requirements
A conventional loan requires a down payment of 5% or more. For people without a lot of liquid capital, this can be a challenge.
An FHA loan, on the other hand can have a down payment of as little as 3.5%.
This makes it easier for people with limited cash on hand to get into the house they want.
The Down Payment Can Be a Gift
With a conventional loan, the down payment has to come from the borrower. In the minds of the lender, this means the borrower is capable of raising money and therefore presents a lower risk of default.
However, with a Murfreesboro FHA loan, you can get the down payment as a gift. This could be especially useful if you already have some money for a down payment, but you’d like to pay more in order to get a lower interest rate—and have someone to give it to you, of course.
Also, the down payment doesn’t have to sit in your bank account for a certain amount of time before you apply for the loan. If this money comes in the form of a bonus you were expecting from your job, this provision could come in handy.
The FHA loan program benefits not just the borrowers but the entire economy. It’s been proven that home ownership helps boost the American economy due to the money spent in maintaining the home as well as hiring people to make improvements.
That being said, it can be a great way to get a home if you have imperfect credit and not a lot of cash in the bank.