There are many reasons to consider choosing an FHA loan:
- You are buying your first home.
- You don't have perfect credit.
- You don't have a huge down-payment
- You think you may not qualify for a conventional loan.
- You don't want high monthly payments
- You worry about not being able to meet your monthly payment.
- Down payment can be in the form of a gift from a family member or significant other.
First you should understand that the FHA (Federal Housing Administration)does not actually lend you the money to finance your home instead the FHA insures your loan against defaults. So interest rates and terms are not set and you should shop around for an FHA-approved lender and find the terms you can live with. Your lender/loan broker MUST be FHA APPROVED! You will be required to put down 3% of the purchase price. This can be in the form of a gift from a family member, employer, significant other or a grant. The seller can pay up to 6% of your closing costs but none of your down-payment. There is also a loan limit with an FHA loan another reason to contact an FHA Approved Lender before you start your search for your new home.