With the historically low-interest rates, now might be the time for you to leap into homeownership with an FHA loan in Delaware. These loans provide an option to conventional financing for borrowers with a smaller down payment or less than perfect credit. The Federal Housing Administration (FHA) is governed by the U.S. Department of Housing and Urban Development and provides homeowners or repeat buyers options.
FHA loans’ underwriting standards make it easier to qualify for and give many individuals a chance to own their first home or refinance their current home to capture a lower interest rate. The FHA provides insurance for these loans, helping to reduce the risk to lenders. Typically, you need to have at least a 580 credit score to qualify. FHA loans are available for buyers with a credit score as low as 500, although there will be additional requirements to prove employment and income. Before you start the mortgage process, you should pull your credit report from all three reporting bureaus to ensure no errors in your credit report. If there are errors, then you can dispute them with the credit bureau to have them removed.
An FHA loan in Delaware offers higher debt to income ratios and less restrictive credit guidelines. Another benefit is the ability to use 3.5% down payment for your mortgage instead of the traditional 20% as required by conventional lenders. It is also important to note that an FHA loan in Delaware allows individuals, charities, and employers to gift you that down payment. Check with your lender to determine if your gift can qualify. You can also meet the minimum down payment using community second mortgage loans and grant programs.
Keep in mind that using an FHA loan will mean you have a mortgage insurance payment (MIP) in addition to your regular monthly mortgage payment, as well as an initial insurance payment that will be due at closing. This insurance is meant to protect the lender in the case of a default by you as the borrower.
Sellers can also contribute to the closing costs as part of your purchase agreement. Check with your lender to determine the percentage caps on what a seller can pay. The FHA mortgage loan program does also have caps for how big a mortgage you can get. Those caps are determined by state and county. Your lender will be able to determine the maximum amount of your FHA loan in Delaware, depending on your county.
You can also purchase various homes, but you must live in the property as your primary residence. Some of the homes that qualify for an FHA loan for single-family detached homes, 2-unit homes, 3-unit homes, 4-unit homes, condos, mobile homes, and even manufactured homes. That means you can find the right home to fit the needs of your family.
If you are ready to take the leap into homeownership, then an FHA loan in Delaware might be the right option for you. Check with our team today to determine your eligibility for an FHA loan.