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Buying a home is not everyone’s cup of tea – many people have told you this, right? Well, have you heard how FHA loan makes it easy-breezy for every person with a poor credit score? When the traditional loan is asking for a 20% down payment, the FHA loan allows a 3.5% down payment. There are other low-payment loans like Fannie Mae and Freddie Mac (known as confirming loans) mortgages with a 3% down payment. However, people with poor credit scores struggle to enroll in such home loan programs. For an FHA loan with a 3.5% down payment, the minimum credit requirement is 580.
A house was sold on December 13th, 2019 at 10026 Lynnwood Dr, Baytown, TX 77521 and its size was 2,222 Sq Ft. The homebuyer was looking for a family house and the four bedrooms & three bathrooms seemed to be a perfect solution. Choosing a loan for $217,125, the house was purchased at $225,000. Now, the thing you should remember is that the buyer put down 3.5% of the loan value and the final down payment amount was $7,875. In the end, the cash to close culminating the closing costs ended up being $5,603.75. So, does home-purchase seem to be an affordable choice? Yes, only if you choose an FHA loan – 3.5% down payment.
Now, would you like to enroll on an FHA loan with a 3.5% down payment? Read the article to gather useful tips.
Credit Scores Linked with Down Payment
A homebuyer’s credit score is one of the crucial factors to decide the down payment of an FHA loan. If a person has a credit score of 580 or higher, you can avail of a 3.5% down payment. When the person has a credit score of 500 to 579, he/she is allowed to put down at least 10% of the loan value. The home loan program is popular for the low down payment criteria and it is easy to qualify as well. When people have blemishes on credit history, this loan is the perfect one to root for. Furthermore, the mortgage is befitting for first-time homebuyers who have minimum credit scores yet willing to obtain a mortgage.
Opt for the Down Payment Assistance Program
A down payment assistance program takes care of the purchasing of your property. The amount might come as a grant. Hence, the borrowers do not have to return the money either. You should discuss the matter with your lender because it often applies to only the first-timers. In case, you are going to choose a second home loan, you may have to pay for the interest. Of course, the program is only granted for low-income homebuyers who cannot pay for a house in the first place.
Take a Mortgage from 401(K)
If your employer permits you to borrow from a 401(K), you can get multiple advantages. However, you may have to return the loan amount along with interest in only five years. If you leave the company, there is also a penalty amount to pay.
There are multiple ways to pay for the FHA loan down payment; however, the low down payment does not bother a large scale of borrowers. Whichever your situation may be, you should seek help from a private lender.