In today’s residential real estate industry, costs have continued to rise. Many areas have seen dramatic jumps in the cost of rentals, making purchasing an attractive option, despite the 20% jump in housing prices from February 2021 to February 2022. And in some areas, the jump in housing prices is even higher.
What is driving this increase in housing prices? Simply put, the housing supply in many areas is not enough to meet the demand. Even as more buyers search for homes, the inventory continues to decline. With the costs of construction materials on the rise due to supply issues related to the pandemic, new home construction is also slowing.
The challenge for home buyers today is to be ready to purchase when a home that fits their needs becomes available. How can you do that?
FHA Financing Options
While conventional mortgages offer plenty of benefits for home buyers, there are still challenges that can make a conventional mortgage difficult to obtain. One of the biggest challenges is the down payment. Individuals and families can find it difficult to continue saving for a down payment, particularly as inflation impacts the costs of most products.
FHA financing offers options to help home buyers, particularly those looking to purchase their first home. With FHA financing, borrowers can get pre-approved and have lower down payments than the traditional 20% that conventional mortgages need.
The FHA financing options also require you to have at least a 580 to qualify, although lenders can set their credit score thresholds. If you have less than a 580-credit score, between 500 and 579, you will need to put down 10% for a down payment. In many cases, the down payment can be as low as 3.5%.
There has also been a recent addition to the FHA financing world. It is known as the NADA. This is 100% FHA financing when a home buyer does not have anything down. There is only one submission, one approval, and one closing.
This program is available for home buyers, including first-time buyers. One FICO score is allowed, along with non-occupant co-borrowers, making it more of an option for borrowers who might be struggling to save a larger down payment.
Loan amounts are based on county limits defined by the FHA. NADA also involves at least one borrower completing a homeowner education requirement. The minimum FICO score for this program is 580, which means that the better your credit score, the easier it will be to qualify for this type of financing.
By providing an alternative financing option, the NADA allows homebuyers to gain access to the capital necessary to purchase a home of their own.
What You Should Know
HUD insures your FHA loan, but the financing is provided by your lender. With the NADA program, you will need to be aware that all of the FHA mortgage guidelines and DU findings will still need to be met. Your lender may also have additional underwriting guidelines that will need to be followed.
If you are interested in exploring FHA financing, including the NADA program, please contact us today to learn more and begin your application process.
7th Level Mortgage is a leading one-stop mortgage company providing deeply informed, custom-tailored assistance with each mortgage transaction phase. If you are searching for a home loan in New Jersey, Pennsylvania, Delaware, Maryland, New York, or Florida, please contact us today so that we can determine the best Mortgage Lender to place your loan with and get you the best possible rate and program.