Nashville, TN FHA Loans

FHA Loan Company in Nashville TN

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 Nashville, 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 Nashville are not for everyone, so it is important to learn if they are your best option, and if you can qualify.

Nashville TN FHA Loans: How Do They Work?

FHA mortgage loans in Nashville have several key differences to traditional loans. These include:

  • Those with less than average credit scores can be accepted.
  • Depending on your credit score, the down payment is as little as 3.5%.
  • FHA loans can only be provided by approved mortgage lenders like Compass Mortgage.
  • The loan must be guaranteed by the FHA.
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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 Nashville, 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.

Which Type of FHA Loan Should You Choose?

There are several different types of FHA loans available, depending on your circumstances.

  • Traditional Mortgage: A loan to finance your primary residence with no extras.
  • Home Equity Conversion Mortgage: A reverse mortgage program for individuals aged 62+. This converts the equity in the property and allows the title on the property to remain intact.
  • FHA 203(k) Improvement Loan: A mortgage that includes the cost of the property itself plus any required renovation or home improvement costs.
  • FHA Energy Efficient Mortgage: A mortgage that includes the cost of the property itself plus the cost of upgrading to energy-efficient systems that result in reduced utility bills.
  • Section 245(a): For those who know or expect their income to increase. Initial low monthly repayments gradually increase over time. The payoff for this option is a shorter loan term.

Is an FHA Loan Right for You?

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:

  • Those wishing to purchase a second residence.
  • Those wishing to purchase a vacation home.
  • Anyone wanting to buy property as an investment.

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:

  • Live in the property for the mandatory year before moving out and renting the property.
  • Purchasing a multifamily residence. Providing you live in one of the units, the rest can be rented out how you wish.

How to Apply for an FHA Loan in Nashville TN

Compass Mortgage can be your Nashville, 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:

  • Pre-approval: This stage determines your eligibility for the FHA loan.
  • Commitment: Providing additional documents will complete your approval and provide you with the exact amount we can lend you. This approval is a better-than-cash offer that will help your acceptance when you find the right property to buy.
  • Down Payment: The down payment percentage determined by your credit score will be made.
  • Appraisal: This step appraises the property to determine its value.
  • Closing Costs: Pay any fees or deposits associated with the sale process.

With all of this knowledge of FHA Loans available in the Nashville, TN area, contact Compass Mortgage to begin your journey of homeownership the easy and affordable way.