Don't have much for downpayment? FHA could be the right program for buying your first home!
If you're considering buying your first home, you're no doubt wondering about the various financing options available to you, and you've probably done at least a bit of research into government-insured loans that are specifically geared toward first-timers.
First time home buyer FHA loans in Orange County and Georgia offer low down payments, low interest rates, and limited fees.
WHAT DOES FHA FIRST TIME HOME BUYER MEANS?
"First time" actually isn't a term that's etched in stone. You could be purchasing your first-ever home, but the FHA also considers you to be a first-time buyer if you haven't owned a home in the past three years. And if you previously owned a home together with a spouse, you're also considered to be a first-time buyer.
How Does it Work?
First Time Home Buyer FHA plans are designed to help first-time buyers. The FHA itself doesn't underwrite your mortgage. Rather, it insures your lender against loss if you should default. To receive a loan as FHA first time home buyer, you will have to provide your lender with documentation of your assets and income, and meet their required debt-to-income ratio (usually a maximum of 43% of your gross monthly income that is applied to the minimum payments on all your debts).
Like everything else in life, of course, first-time home buyer loans have their pros and cons.
The Pros and Cons
First time home buyers FHA plan being govt. assured have fewer restrictions, so if you don't have a lot of money saved up for a down payment, can't handle high interest rates, or don't have a good enough credit score to qualify for another type of loan, home ownership is still possible. Even if you can afford a large down payment, the low interest rates still make this type of loan desirable.
The cons are as follows:
FHA loan has higher mortgage insurance requirements than you'd get with a conventional loan, and unless first time home buyers FHA make a large down payment, they will have to pay the insurance for the duration of the loan.
- If you want an expensive home in a fabulous neighborhood, you probably won't qualify as a first time home buyer.
- First-timer loans aren't available for rental properties, so if you were planning on buying a multi-family unit and using your rental income to pay down your mortgage, FHA loan won't work for you.
- You may be unable to change the terms of your debt or refinance at a later date.
- You can only have one first time home buyer FHA plan at any given time. So if you've taken out a first-time home buyer loan, and you're considering purchasing a second property, FHA loan will not be an option for you.
Despite the cons, a first-time home buyer loan can still be an attractive option. It depends on your financial situation and the type of home you want to buy.
Bankruptcy, Foreclosure and FHA Loans:
If you found it necessary to file for bankruptcy at some point, first time home buyers FHA loans may be the best possible option. With practically any bank, that's likely to be a huge issue. However, with FHA loan, a bankruptcy that occurred more than two years ago will not disqualify you. With a foreclosure that occurred more than three years previously, again, a bank is going to be hard to deal with, but the case is opposite with FHA loan first time home buyer. The FHA also is more lenient with people who are self-employed, have shorter work histories, or higher debt levels than banks are typically comfortable with.
Well Worth Considering:
There are a few cons, but if you're in the market for a new home, and it's your first time around, FHA-insured loan is well worth considering. Generally speaking, the pros relating to first time home buyer FHA plans outweigh the cons.