Homebuyers, who find it difficult to get approval for a conventional mortgage, often apply for an FHA home loan program. Designed especially for first-time homebuyers or for the ones, who have not owned a home in the last three years; it is a government back home loan program.
And for this, you can get approval even with a low credit score as low as 500. But to get approval for an FHA loan 500 credit score Texas, you need to opt for a lender. The lender will check your credit history and then offer you approval.
Are the myths preventing you from applying for this loan? Let’s debunk the myths together –
- An Excellent Credit Score is a Must to Get Approval
A great credit score is something that every homebuyer wants as with this, one has wide choices in terms of loan availability. Besides, one can also borrow more. However, the concept that FHA loans require a great credit score is not right. As an FHA loan is a government-backed home loan program, one can get approval with as low as a 500 credit score. Those with a low credit score may need to pay more in terms of interest, but they can qualify. So, you don’t need to worry about approval if you have a bad credit score.
- You Can Buy Only Single-Family Home with This Loan
No, it is nothing but a misconception. Single-family residences are the most popular among homebuyers. But you can apply for an FHA loan and can get approval even if you want to buy a condo or multi-family home. So, irrespective of your home choices, you can qualify for this loan. But you need to make sure that it is your primary residence and you live there.
- 20% Down Payment Is Required to Get Approval
Another myth that is associated with FHA loans. The lenient loan requirements tempt people to opt for this loan. While a traditional loan needs a 20% down payment, with an FHA, one can get approval with only a 3.5% down payment. But as the down payment requirement varies based on the credit score, you may need to come with a higher down payment like a 10% down payment if your credit score is low. But then also, it will be lower than a traditional loan. And as you can opt for various down payment assistance programs, arranging the down payment will not be difficult for you.
- You Don’t Require Mortgage Insurance for This
Nothing but a myth! While most home loan programs don’t need you to obtain mortgage insurance, an FHA loan does. It is structured differently in terms of payment arrangement. And for this, along with paying the premium overtime in a given year, generally, every month, you need to pay an upfront premium. It means a certain percentage of the policy is due at closing. But based on the loan agreement, the terms and conditions may differ.
So, there is a huge difference between what you heard and what the reality is. For this, you should never blindly believe what you heard. And now, start looking for the lenders who offer this loan and apply for it today!
