FHA Loans: Everything You Need to Know
Many moderate or low-income homebuyers from Florida and Michigan consider taking the help of FHA loan to get their first home. In this article, we have discussed different aspects of this loan.
FHA Loan: The Definition
A type of mortgage that the Federal Housing Administration insures is known as an FHA loan. The FHA-approved lenders in the US can issue these loans.
In 1934, Congress launched the FHA to support borrowers from lower-income groups to secure a mortgage. During that period, the nation was recovering from The Great Depression. With FHA loan, the government aimed to increase the homeownership and bring the economy back on track.
How to apply for an FHA loan
You need to submit financial and personal documents when applying for an FHA loan. The documents required vary by the lender you have chosen. A lender typically asks for:
- Proof of US citizenship or legal permanent residency
- Bank statements for the last 30 days (minimum)
- The Social Security Number
- Employments records
- Tax returns
- Credit reports
The students applying for this loan may have to produce additional documents due to the lack of credit score.
Benefits of FHA loan
There are several benefits that FHA loan a better alternative for many borrowers. These benefits include:
People with lower credit scores are eligible – For 3.5 percent down payment, the minimum credit score is 580. The credit score should be 500-579 if the down payment is 10 percent. The average score in 2019 was 675.
Borrowers with no credit history can apply – As per the US Department of Housing and Urban Development, FHA lenders cannot deny an application because a borrower lacks credit history. The applicants without a credit history can use documents like car insurance bills, phone bills, and utility bills while applying.
High mortgage limits – The US counties or Metropolitan Statistical Area decides the FHA mortgage limits. It can range 331,760 dollars to 765,600 dollars in most of the areas.
Other things to keep in mind
The property for which you are seeking an FHA loan must comply with health and safety standards. To qualify, your mortgage payment must not cross 35 percent of what you earn. Also, the mortgage payment and other monthly debts must not cross 48 percent of your income.
FHA Loan in Michigan
You can rely on Sonic Loans for FHA Loans in Michigan. They have helped various individuals from the US in buying their first home. The Better Business Bureau (BBB) gave an A+ rating to this lender for its excellent services. The individuals looking for VA Streamline Refinance loan also connect with Sonic Loans. Find more details about this FHA loan lender from here: https://www.sonicloans.com/