One of the most common questions that many people have asked us over the last year is what are the pros and cons of FHA loans because most buyers have heard about FHA loans and are considering this option versus a conventional mortgage loan.
In this article, we will present you with the advantages of choosing an FHA loan which include the following:
FHA Loans Are Backed By the Federal Housing Administration
The first advantage of choosing an FHA loan is that they are backed by the Federal Housing Administration and have the same terms & conditions across the board. This means that this type of
mortgage loan is very secure compared to other mortgage loans and sellers can have confidence whenever someone submits an offer to them who has an FHA loan.
Lower FICO Score Requirements
There’s no denying that qualifying for a conventional mortgage loan may be difficult for some home buyers because both Fannie Mae and Freddie Mac require a minimum 620 FICO score but with an FHA loan a homebuyer can have a FICO score that’s as low as 580 and still qualify for a mortgage loan.
Same Mortgage Interest Rate Regardless Of Your FICO
Another benefit of choosing an FHA loan is that regardless of your FICO score your mortgage interest rate will be the same compared to conventional mortgage loans while it’s not uncommon for home buyers who are applying for conventional mortgage loans to get “penalized” with higher mortgage interest rates if they lower FICO scores.
Higher Debt-To- Income Ratio Allowed
Last of all, but most important, when you choose an FHA mortgage loan another huge benefit you will enjoy is that FHA loans allow you to have a higher debt-to- income ratio when compared to conventional mortgage loans.
With FHA loans you can have a DTI as high as 55% compared to 43% with a conventional mortgage loan and this benefit alone can save many buyers the time, money and hassle of trying to qualify for a conventional mortgage loan when they may already qualify for an FHA loan and not be aware of it.
Learn More about FHA Loans
To learn more about FHA mortgage loans, or to view homes for sale in Southern California, contact Fred Sed Realty today at (800) 921-9231 or connect with us online.
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