Normal, IL
FHA Loans

FHA Loan Company in Normal, IL

If you are paying monthly rent, there is something you should know. Your hard-earned money that goes for rent every month will never build up equity in the place you are living in now. You need your own home.

If you do not think you can qualify for a home mortgage loan, you might not be aware of all the mortgage options available for everyone, especially those with less-than-perfect credit. A Normal, IL FHA loan can help you into your very own home.

FHA loans are one of several different loan programs available to homeowners seeking mortgage assistance. The FHA loan is insured by the Federal Housing Administration and is a government-backed loan. Issued by private mortgage lenders, an FHA home loan is a very attractive way for people to purchase a home with a small down payment and an average credit score.

How Does a Normal FHA Loan Work?

An FHA loan is always backed by the Federal government, which means it gives a special guarantee to Normal, IL FHA loan lenders who issue them. Should the homeowner ever default on their mortgage, the FHA will reimburse the lender all the remaining principle.

If you have average credit and not a lot of money for a down payment, an FHA loan is the perfect mortgage lending option for you. In fact, one of the most popular options of an FHA loan is the small down payment that is required. A Normal FHA home loan could be yours with as little as 3.5% down.

With an FHA loan, if you do make a down payment of less than 20%, you will be required to carry private mortgage insurance (PMI). PMI is a monthly premium protecting the lender should the borrower ever stop making monthly mortgage payments. Private mortgage insurance is usually removed once your loan-to-value ratio reaches 80%.

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What About Credit Scores?

It seems that credit scores are used to determine many things these days, and applying for a mortgage loan does require a credit check. According to the FHA, if you are looking to make a low down payment, such as 3.5%, you will need a credit score of 580 or higher. Borrowers with a credit score of 500-579 will be required to make a down payment of 10% or more.

What Kind of Income Requirements Do I Need for an FHA Loan in Normal?

To be eligible for a Normal FHA loan, there are specific financial requirements. FHA loan lenders will consider your debt-to-income ratio. This means that your lender will look at all your debts as compared to your monthly income. Lenders like to see that you have money left over at the end of the month after paying all your bills. A lender will like a debt-to-income ratio of 31-43%.

Conventional Loans Vs. FHA Loans

If you are considering Normal FHA mortgage loans but are still wondering about a conventional loan, the choice is always based on your financial situation. Conventional loans are better suited to people with above-average credit and who have enough money for a down payment of 20% or higher. For those looking to purchase high-end properties, a conventional loan is usually the way to go.

Conventional loans come in two forms: conforming and non-conforming. Conforming loans follow the directives set by Fannie Mae and Freddie Mac. These are known as government-sponsored entities (GSEs). They purchase mortgage loans from lenders, package them into securities, then sell them to investors. Mortgage loans which exceed Fannie Mae and Freddie Mac’s maximum loan amount are non-conforming or jumbo loans.

For a Normal home buyer who is looking to purchase a more expensive home, a conventional loan provides greater flexibility than an FHA loan. An FHA loan caps out at about $330,000.

For those who cannot afford a 20% down payment, FHA home loans are the perfect solution. These types of loans are easier to obtain because the FHA guarantees the loan, which means lenders are not putting themselves at greater risk by offering them to homeowners.

Take Advantage of Normal FHA Loans Today

Interest rates are at historic lows these days. If you are in need of a mortgage loan for you and your family, be sure to inquire about our FHA mortgage loans. Interest rates are always determined by your credit score, debt-to-income ratio, and a down payment amount.

At Compass Mortgage, our priority is to see each of our clients as homeowners. We know everyone has integrity and worth and deserves the very best in life. With our expertise, we can direct you to the path of homeownership. Because we go above and beyond in all that we do, we know we can find you the perfect FHA loan for you. Contact our experienced mortgage loan team today.