Who are FHA mortgage lenders? If you are intrigued in acquiring a mortgage loan, then you need to know that you cannot get a traditional loan if you have low credit scores. If you want to obtain an FHA loan, then there are many facts you need to know. FHA mortgage lenders allow you to borrow money that is insured against the loss by federal housing administration. There are different types of FHA loan to choose from. Backed by the Federal Housing Administration these loans extremely popular among first-time buyers and those who do not have an impressive credit score.
Types of FHA mortgage loans are as follows:
- Conventional fixed rate
- Conventional adjustable rate
- Jumbo fixed rate
- Home equity
Best FHA loan programs:
You want to acquire FHA loan but worrying about the FICO score. Don’t worry you can get an FHA loan even with low credit scores and down payment. If you have a FICO score of 580 or more than you can acquire FHA loan for 3.5% down payment. If you have a score of less than 580, then you can get a 10% down payment. Thus FHA is providing assistance in making the low credit scorers homeowners.
There are various types of FHA loans offered, and you can choose one according to your needs.
Conventional fixed rate:
In a conventional fixed rate mortgage, monthly payments remain the same throughout the duration of the loan. However, if there is any fluctuation in the property taxes or the cost of homeowner’s insurance the payment will be changed accordingly. In simple words, this mortgage loan is set for a specific period at a particular interest rate. The interest rate in conventional fixed mortgage never changes.
Conventional adjustable rate:
In the conventional adjustable rate the interest rate changes over the life if the loan. However, this type of loan is also set for a particular period. The interest rate fluctuates that means the monthly payments will also change. In this type of loan interest rate is fixed for only first three to five years of the loan.
Jumbo fixed rate:
Jump fixed rate loans are for the borrowers who want to acquire big loan amounts. It is highly risky to lend a huge amount as a loan for the lenders, so the interest rate in these loans is generally high. Well, FHA insures the loans to save the lender from any loss that may occur when the borrower cannot repay the loan amount.
It is a great mortgage loan for the people who want to purchase a home but cannot afford to. In a balloon loan, they purchase a home and make little payments in the beginning and pay back the full mortgage later. It is the best source of financing home for the people who know that they will be able to pay the entire loan after a few years.
It is similar to adjustable rate mortgage but the fixed rate period is longer in a hybrid mortgage.
The people who do not have the proof of steady income can obtain FHA loan for self-employed home buyers.
It is the type of loan in which you can buy a new home before selling your existing home. The mortgage payment in a bridge loan is high because it pays for both homes until you sell your current home. It is also insured by FHA.
On the base of the existing equity in the property, the homeowners can take out a loan.
All the loans described above are insured by FHA. FHA directly does not provide loans it only ensures the loans and FHA mortgage lenders then offer the loan amount to the consumers. These loans are a great way of financing a home for those who cannot acquire a conventional loan due to their lousy credit scored. These loans give an equal opportunity to everyone to purchase a new house of dreams. But of course, you get lower down payment if you have a good credit history and vice versa.