Five Misconceptions about FHA Loans

Purchasing a home is one of the largest investments you will ever make, which is why it’s important to choose an option that fits your needs and budget. Homebuyers typically decide between an FHA loan or a conventional mortgage. If you’re uncertain if you can meet the standards necessary to secure a conventional mortgage loan, a Federal Housing Administration, or FHA, loan might be the right choice for you. It’s a mortgage product backed by the government, which helps borrowers who present higher risks to lenders, whether due to credit score, down payment amount or other factors.

If you are in the market for a new home in St. George, don’t think you have to figure out your mortgage options on your own. 1st Rate Mortgage should be your mortgage lender of choice in St George, Utah. We can answer your questions and guide you to the best mortgage option for your situation.

Let’s start by clarifying five common misconceptions about FHA loans.

Like conventional mortgage loans, FHA loans don’t have a magic credit score that you must hit; each borrower’s situation results in different criteria. While it is true that you’re unlikely to qualify for an FHA loan if your credit score is below 500, you can still get an FHA loan with a credit score as low as 580. However, the lower your credit score is, the higher your interest rate will be. Also, the lower your credit score, the more you’ll likely be required to put down upfront.

Most borrowers can qualify for FHA loans that require a 3.5% down payment, although certain people may be able to find a 3% option. If you can’t come up with the down payment on your own, you can accept gifts from family members or funds from down payment assistance programs.

These loans are insured by the Federal Housing Administration — the FHA does not lend money. You’ll need to work with an FHA-approved lender to guide you through the process.

The FHA offers a 203k loan that allows you to borrow the funds for renovation costs as part of your mortgage — one loan, one closing. The amount you borrow is the sum of the home’s price and the estimated price of the repairs. You can use a 203k loan whether you want to take a place down to the studs or just update the bathrooms.

FHA loans are available to anyone who meets the minimum qualifications. You don’t have to be a first-time homebuyer to qualify for an FHA loan.

If you’re considering an FHA loan, don’t let myths about the program dissuade you. FHA loans offer several benefits that other loan programs simply can’t match, and in many cases, they’re more affordable than you might think. Do your research and talk to your all-in-one mortgage lender in Utah, 1st Rate Mortgage, to see if an FHA loan is right for you — you may be pleasantly surprised by what you find.

It’s true. FHA loans are a great option for many borrowers in our area, but you won’t know if one is right for you until you sit down with your mortgage lender in St George, Utah. Whether you are purchasing your first home or moving up, the FHA home loan program can be a big help.

At 1st Rate Mortgage, we’ve been helping individuals and families purchase the home of their dreams for many years. We love what we do! Our company is an all-in-one mortgage company based in Washington, Utah, that serves the needs of home buyers and homeowners in Washington County, Utah County, Salt Lake County, and Davis County.

Questions about this, or any other, financing option? We’re here to help!