Are you looking to buy a new home in Austin? If you are, then an FHA loan may be the right choice for you. The most important factor in the purchase of a new home is to consider how much you can afford. It is important to add in the additional expenses of insurance, taxes, utilities, and upkeep when determining the overall monthly payment amount that you can afford.
You may find a home that you feel is perfect for you and your family, but the payment is on the edge of what you can comfortably afford. If it is already on the edge of what you can afford, can you still afford the payment when you add the rest of your expenses into your total monthly expenses? Before getting your heart set on a home, plan your costs out in advance. That way you don’t have any surprises when it comes time for your FHA loan application process.
After finding the perfect home in Austin and factoring in your additional expenses, it’s time to apply for a home loan. An FHA loan is the easiest loan to qualify for, so when you contact your Austin lender, ask about an FHA loan. What are five crucial facts about an FHA loan?
Your debt-to-income ratio (DIR) must be 55% or less. That where your above calculations come in handy. Before you walk in the door of your realtor’s office, you should already know what you can afford. Even though the government will pay off the loan if you go into default, that doesn’t mean that the government wants you to go into default. Know your numbers before you go into the office.
Regarding your credit score, you will need a good score to be eligible for an FHA loan. You need a median FICO score of 580. However, this alone is not sufficient for an automatic approval. If you are behind on payments and your score is going down, having a 580 score will not be good enough for approval. In addition, if your DIR is not under 55%, you will not be approved even if you have a credit score in the 700’s. You can have a lower score if you make a higher down payment. Again, this will only be an option if your recent credit history shows good credit management.
For a down payment on an FHA loan, you must have 3.5% of your home’s loan value to make a down payment. However, if you have a credit score between 500 and 579, you may still be eligible for an FHA loan. With a FICO score between 500 and 579, you must put down 10% of your home’s value for approval.
Gift of Down Payment
One great benefit of an FHA loan is that you can have your down payment gifted to you by a friend or family member. The only stipulation is that the person giving you the gift does not expect the money to be repaid to him or her. The people backing the FHA loan do not want you getting into another financial obligation to cover the expense of the down payment. Your gift-giving friend or family member will need to sign a gift form to prove that he or she doesn’t want repayment.
With an FHA loan, you can include most of your closing costs into your FHA home loan. By including your closing cost into your home loan, you can lower your out-of-pocket expenses at closing. There is one stipulation: if you include the closing costs of the loan, your total loan value cannot exceed 96.5% of the home’s fair market value or selling price.
Contact Signature Lending Services Now
The keys to getting an FHA loan in Austin is having good credit and selecting a house that is within your budget. When preparing to apply for a home loan, have all your documentation ready for a faster approval process.
Don’t make FHA loans complicated. If you want expert advice to guide you through the process and help you have the most pleasant home-buying experience, contact Signature Lending Services. We are an experienced industry leader. To get started with an FHA in Texas, call (877) -948-2562.