An FHA loan is a home loan insured by the FHA, Federal Housing Administration. If you are a first time home buyer and have a credit score of 580 or more, then with an FHA loan, you just need to make a down payment as small as 3.5%. However, you need to pay a monthly mortgage insurance premium against the loan, which shields the lender in case borrower defaults.
Unlike conventional mortgages, FHA loans are secured by a government that safeguards the lenders, allowing them to offer potential borrowers more competitive interest rates on traditionally more precarious loans.Since FHA loans are government-backed; they come with easier qualifying criteria, relatively low closing costs and down payment requirements.
You can browse the Internet to get in touch with a reliable FHA-Approved lender if you are looking to secure an FHA loan in San Jose.
Are FHA Loans the Right Choice For You?
While an FHA loan may sound really good, it is not for everybody. Usually, people having a credit score of less than 500 are not qualified for an FHA loan.
Also, borrowers who can pay for a large down payment may better off go with a conformist mortgage solution. This way they can save more money in the long run by way of lower interest rates and mortgage premiums that conventional lenders offer.
In case your requirements are specific or you are looking for an online mortgage in Bay Area, you can check out the different websites and the interest rates they are offering. Also, talking to an FHA advisor can help you better determine whether this type of mortgage is right for you or not.