The Federal Housing Administration offers private loans for existing or new home purchases as well as programs for home repairs if you’re seeking an FHA Loan in Phoenix.
What is an FHA Loan?
The FHA is a government agency inside the U.S. Department of Housing and Urban Development. An FHA loan is a type of mortgage that is insured by the Federal Housing Administration. Borrowers with Arizona FHA loans are required to pay for mortgage insurance so the lender is protected from a loss if the borrower happens to default on the loan itself. Due to the credibility of this insurance, lenders offer borrower-friendly FHA mortgage rates. Like the VA Loan, the Federal Housing Administration in Arizona allows lenders to be flexible when considering applicants.
Do I Qualify For an FHA Loan?
To be considered for an FHA loan with low interest rates, your credit score should be around 580 or higher. Although this depends on the type of loan you are requesting, credit scores between 500-579 typically are limited to borrowing 90% loan-to-value. If you meet requirements, the Federal Housing Administration may award allowances for persons under certain circumstances, such as insufficient or nontraditional credit history. This is something that each individual will need to inquire about on their own.
Some lenders may agree to pay closing costs, but they will typical charge higher mortgage interests rates as a result. As a borrower, you reserve the right to “shop around” and we suggest using the good faith estimate when doing so. You may also speak with your Price Mortgage loan officer, to determine the best option for you.
Mortgage rates and underwriting policies vary amongst lenders so it is important you find someone you can trust. The FHA will allow sellers, lenders, or builders to cover portions or all of your closing costs, as well as the right to negotiate this process. Closing costs can include title expenses, an appraisal, or credit reporting fees.
How Much Money Down Do I Need?
With this type of loan, you are only required to pay 3.5% of the total loan towards a down payment. When comparing this aspect to other loans, this amount is significantly smaller and more affordable for most buyers, especially young first-time homebuyers. With an FHA loan Arizona, you are able to make the downpayment with your own monetary savings or other forms of income. Borrowers can also use cash gifts from relatives, grants from the government, or down payment assistance programs to help them make this payment, which is not always an option with other types of loans.
Not only does the Federal Housing Administration offer FHA Arizona home loans, it also offers special loan products pertaining to home repairs. The 203(K) loan focuses on the projected value of the home once repairs are completed. Since it does not focus on the current appraised value of the home, you are able to finance up to $35K towards nonstructural repairs with this type of loan. The repairs can include home fixtures, painting supplies, and other replacement expenses.