Are you ready to make the switch from renting to home ownership but still have some obstacles that seem to prevent you from making this change? If so, choosing an FHA home loan over a conventional mortgage could help you to overcome these obstacles and realize your dream of buying your first home. This is because FHA home loans offer several benefits that are geared toward helping first-time home buyers overcome some of the most common obstacles to home ownership.
In this article, you can learn more about some of these benefits and how they can help you buy your first home.
#1: Required Down Payment
Most home loans will require you to have a down payment regardless of whether you choose a conventional mortgage or an FHA home loan. The difference between these two types of home loans is the amount of the down payment you are required to have. The exact amount of your required down payment will depend upon the purchase price of the home you want to buy. However, FHA home loans typically require you to have a smaller percentage of this purchase price available to use as a down payment. If you have been struggling to save up enough money to meet the down payment requirements of a conventional mortgage, this lower down payment requirement could allow you to make your dream of buying a home a reality.
#2: Credit Score Requirements
Another area in which FHA home loans can help first-time home buyers is the credit score requirements associated with this type of home loan. In order to qualify for any mortgage, you will need to meet a minimum credit score requirement. This score requirement is often much lower with an FHA home loan. This is beneficial for first-time home buyers since they often have a limited credit history and therefore may not meet the requirements set out by traditional mortgage lenders. This feature can also be very beneficial to individuals who are working on repairing their credit in order to qualify for a home loan.
#3: Gift Contribution Rules
Many first-time home buyers rely on assistance programs to help them cover the cost of their down payment and closing costs. Unfortunately, many conventional mortgages will prohibit gifts from these types of assistance programs. In fact, the gift contribution rules associated with a conventional mortgage will often limit gifts to your spouse and immediate family. FHA home loans on the other hand allow you to accept gifts from your friends, family, co-workers, and both government and private assistance programs.