Homeownership is a life goal for most US citizens. The problem is that it is completely out of reach for many people. This is due to the significant down payments that traditional mortgage lenders require. The typical amount for a down payment is 20%. When you consider that the average house price in the US is around $400,000, suddenly homeownership seems like a distant dream.
Homeownership should be achievable for anyone that earns an income, and thankfully this has been made possible. Now middle to low-income earners can buy a home with only a minimum down payment.
The FHA (Federal Housing Administration) loan enables would-be buyers in Minneapolis to purchase a home with a down payment of as little as 3.5%. On a $400,000 home, that would mean only $14,000 is required to purchase the home (plus fees).
With that said, a Minneapolis, MN FHA home loan is not suitable for everyone. So, let Compass Mortgage show you how FHA loans work and who they are best suited for.
Minneapolis, MN FHA home loans are available in the following circumstances:
Your credit score will determine the down payment. If your score is between 500 – 579, you can still be accepted; however, the down payment required will be at least 10%.
For scores of 580 and upwards, you could be approved for the lowest rate of 3.5%. It is worth noting that traditional lenders require a credit score of 620+.
Minneapolis FHA home loans are easy to apply for. First, you must go through an approved lender such as Compass Mortgage. You must then also pay a monthly premium to the FHA to provide the guarantee. Essentially this means that the FHA will pay any claims to your lender should you default on the mortgage payments.
Several different types of FHA loans are available. Your lender will advise on which one is best for your circumstances:
There are some conditions that you must adhere to if you decide to take out an FHA loan. The first is that the loan must be used to purchase your primary residence. The second is that you must move in within 60 days of completing and receiving the keys. Finally, you must live in the property for at least a year. An FHA loan cannot be used for:
However, you can acquire a rental income from a property you have purchased with an FHA loan. There are two ways to do this:
Compass Mortgage is one of the approved Minneapolis, MN FHA loan lenders. Our high level of experience and expertise will help you find the perfect mortgage for your needs.
There are five main steps to the FHA mortgage loan process:
Give the experienced team at Compass Mortgage a call and let us help you buy the home you always wanted.