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You want to buy a home but your low income preventing you from realizing your wish. Well, not to worry. With an FHA home loan program, the first time low to medium-income home buyers can get financial assistance and buy their dream homes. Designed by the Federal Housing Administration, this loan is offered and approved by the FHA-approved lenders.
Lenient requirements such as low down payment and credit score make it one of the most famous loan programs to first time home buyers. With this, you can buy a home with as low as a 3.5% down payment and 500n credit score. Besides, you can fund the down payment through down payment assistance programs or by asking for help from your relatives or family members.
But before you apply for an FHA loan with a 3.5% down payment, you need to focus on these things –
- Calculate how much home you can qualify for
Before you apply for an FHA loan to buy a home, it is essential for you to know how much home you can qualify for. Without having this idea, it would be difficult for you to proceed further. Wondering how to calculate this? Well, it is very easy. Using a custom-designed mortgage calculator for the FHA Loan program can help you with this.
- Take steps to improve your credit score
The credit score is one of the fundamental things that mortgage lenders check before approving a home loan application. This is applicable for an FHA loan too. It is because your credit score reflects your creditworthiness. So, if your credit score is low, take steps to improve it as early as possible. Clearing the previous debts, paying bills on time, not applying for new credits, checking for errors and rectifying these, are some of the things that will help you with these.
- Shop for lenders
As there are no particular eligibility criteria mentioned by the FHA, the lenders set it in their own way. And so, it varies from an FHA-approved lender to another one. While one asks for a high credit score and down payment, another one may ask for a lower credit score and down payment. So, when you are looking for an FHA loan approval, you should opt for several lenders, compare their rates, and then pick a suitable one for you.
To get a clear picture, consider this real-life example, where a house was sold on 12/13/2019 at 10026 Lynnwood Dr, Baytown, TX 77521 for $225,000 with 4 bedrooms and 3 bathrooms and the size of the home is 2,222 Sq Ft. With an FHA home loan program, the down payment would be only 3.5% or $7,875 and the loan amount is $217,125 and the cash to close including closing costs could be $5,603.75.
So, start working on the above-mentioned things and ensure an FHA home loan approval with a 3.5% down payment.