Minimum FHA Down Payment Incentives

The FHA (Federal Housing Administration) backs loans to clientele with low credit rating and/or limited credit. While primarily targeting first-time home buyers, FHA loans are also available to other prospective home buyers who cannot obtain conventional loans.

One of the major obstacles for such clientele is saving the necessary down payment for a conventional loan. FHA alleviates this problem in that it requires as little as 3.5% of a property’s market value for a down payment.

Should I get an FHA Home Loan?

Is an FHA loan your answer to your long-dreamed-of home?

If your capital is small and credit issues have plagued you, FHA will allow you to use monetary gifts, in addition to what you can contribute, as a down payment. Some states also offer down payment assistance.

Be aware that with an FHA loan, monthly insurance fees of 0.85% are added to your costs; this sometimes makes them costlier than conventional financing. However, if you have an excellent credit score in the 700-800 range, you may want to compare the benefits of conventioanl financing to an FHA loan.

It is good to know that there are options!

FHA Max Loan Amount & Qualification Requirements

There are limits to the amount of money that can be loaned through FHA, varying from state to state and locality to locality. Maximum home loans in high-cost living develpments are approximately $362,250.

There are certain requirements that must be met in order to secure a loan. A down payment of at least 3.5% must be provided. A credit score of at least 580 on the FICO (Fair Isaac Corporation) credit rating scale is also necessary, although with a credit score as low as 500 and a higher down payment of 10%, the loan may still be secured.

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