Seemingly, houses are not lowering in cost, and it is becoming increasingly difficult to come up with the 20% down payment that traditional mortgage lenders require. It is no wonder that people are spending half their lives renting and struggling to save the cash required to buy their dream home.
Fortunately, there are solutions available that will relieve anyone who is starting to think they will be stuck renting forever.
There is a type of mortgage loan available called the FHA (Federal Housing Administration) loan. Instead of requiring a massive 20% down payment, those who take out an FHA home loan in the Franklin, TN area can do so with a down payment of as little as 3.5%.
Suddenly, homeownership is possible for many more families, especially those in the middle to low-income brackets. With that said, FHA home loans in Franklin are not for everyone, so it is important to learn if they are your best option, and if you can qualify.
FHA mortgage loans in Franklin have several key differences to traditional loans. These include:
Typically, a person cannot receive a mortgage if their credit score is less than 620. If yours is lower than that, you used to be stuck, but not any longer. FHA loans can be granted to buyers with credit scores as low as 500. If your score is between 500 – 579, you will be required to provide a down payment of at least 10%. If your score is 580 and above, then the down payment can be as small as 3.5%.
While approved Franklin, TN FHA loan lenders provide the mortgage loan, the FHA provides the guarantee. This means you pay a monthly premium to the FHA, and they will pay any claims to your lender should you default on the mortgage.
There are several different types of FHA loans available, depending on your circumstances.
You cannot take out an FHA loan if it is not intended for the purchase of your primary residence. Once you have completed the property, you must move into it within 60 days and remain living in it for at least a year. This makes the FHA loan unsuitable for:
It is possible, however, to achieve a rental income from a property bought with an FHA loan. This can happen in one of two ways:
Compass Mortgage can be your Franklin, TN approved FHA lender. We can provide expert advice on the right type of mortgage for your needs.
The FHA loan application process involves several stages:
With all of this knowledge of FHA Loans available in the Franklin, TN area, contact Compass Mortgage to begin your journey of homeownership the easy and affordable way.