Credit Qualifications For A FHA Loan
Are you thinking of securing an FHA loan to buy a home? Well FHA loans are quite appealing, especially for first-time borrowers with low credit scores and young credit history. The FHA loans are also preferred by experienced homeowners who are not financially stable due to the low credit qualifications required to secure a mortgage.
Credit qualifications for an FHA loan
FHA loan has the lowest credit score requirements for all borrowers who need to secure a mortgage. With a credit score of at least 500, you can get an approval for the FHA loan. However, there are some drawbacks you are likely to experience with these low credit scores.
• You will be required to pay a 10% down payment as you secure the loan.
• The low credit scores attract higher interest rates of about 2% higher than the normal rates. This is a result that becomes so expensive to manage, and you may end up paying a lot of money on the monthly installments and on the interest rates charged and the loan repayment as well.
Increasing your credit score can thus be an ideal way to evade the extra expenses and helping you enjoy the mortgage at lower interest rates. You don’t want to find yourself in a position where you’re applying for credit to get the home of your dreams and find that your identity has been stolen and your credit scores have been ruined. I recommend that you can get your credit scores from all 3 credit bureaus (Equifax, TransUnion, and Experian) and Identity Theft Protection here for a 7 day trial for $1.00.
Benefits of higher credit qualification
You will get more lenders competing to get you a loan at a lower interest rate.
You will also enjoy lower down payments of about 3.5% once you secure the loan.
FHA loans are indeed a great deal to consider if you have a low credit score. However, you will need to increase your credit qualifications to enjoy better interest rates for the mortgages. You also need to maintain a good credit history to secure an FHA loan. Ensure that you understand the loan terms before you can move forward to signing the loan. Simply go for what you can comfortably afford.
