With rental costs continuing to rise throughout New York, many individuals are looking for a way to take advantage of homeownership. One of the options available to finance a home mortgage is an FHA loan in New York. The Federal Housing Administration (FHA) offers a mortgage program that allows individuals to gain access to financing without necessarily going the conventional financing route.

FHA home loans in New York include home mortgage insurance, which is meant to reduce lenders’ risk if the borrower defaults. As a result, these lenders are more willing to offer these FHA loans in New York with lower interest rates and requirements that allow people to make the leap to homeownership.

Here are a few of the key benefits of using an FHA loan to finance your home purchase. The first aspect is that appealing is the lower down payment. Typically, these loans only require a minimum down payment of 3.5%, which can also be gifted to you by family, charitable organizations, or employers. There are specific regulations regarding this type of gift, so check with your lender to make sure that you are following those guidelines. The closing costs are also considerably less than traditional financing options.

It is also easier to qualify with less than perfect credit. In New York, an FHA loan typically offers lower interest rates as the Federal government insures FHA loans, thus opening up financing opportunities for first home buyers. If you have less than perfect credit, including bankruptcy or foreclosure, then the FHA program may still be a financing option for you. However, some timeframes determine whether you will be able to get financing. For instance, a foreclosure has to be a minimum of two years ago before you can be considered for an FHA mortgage. It is essential to check with your lender to determine your eligibility if you have a bankruptcy or foreclosure on your credit report.

With your credit report, it is wise to pull it from all three credit reporting agencies and determine if everything is correct. Any errors should be corrected before you begin the process of applying for a mortgage.

The FHA mortgage program also allows for refinancing your current home, purchasing a fixer-upper, or your first home. If you are purchasing a fixer-upper, you might be able to include the purchase and the repairs into your mortgage. Working with your lender will help you determine whether you qualify for this type of financing.

It is important to note that these FHA mortgages do have additional insurance costs that will be added to your monthly mortgage payment, as well as an initial mortgage insurance payment that will need to be made as part of your closing costs. FHA mortgages also have caps on how big the mortgage can be, and these are defined by states and counties. Each year, these caps have increased to reflect the increasing home values in the area.

If you are ready to purchase a new home, then contact our team to learn more about whether you might be able to qualify for an FHA loan in New York.