The Basics of FHA Home Loans in Texas
If you are looking to purchase a home in Texas through an FHA loan, the first thing you would most likely do is to find an FHA-approved lender that will assist you in the entire process. Is this a wise move? Probably not. Before seeking out a lender, why not familiarize yourself with FHA loans first? Find out what it is, why it could work for you, and how you can get your loan approved, among many others. In this blog, we will touch on the basics of an FHA loan to help you decide if it’s a good fit for you as a home mortgage borrower.
The FHA Loan
A mortgage loan insured by the Federal Housing Authority, FHA loans are preferred loan options because of its low down payment. FHA loans typically offer a 3.5% down payment to homebuyers who have a credit score of 580 or more. But while the initial payment is low, FHA loans require borrowers to pay mortgage insurance premiums as a means to protect the lender in the event that a borrower defaults on the mortgage loan.
The mortgage insurance
Whereas a conventional loan would demand stringent requirements, an FHA loan is less strict. For this reason, FHA loans require two kinds of mortgage insurance. The first one is paid in full upfront, although it can also be included in the mortgage loan. The other one will be charged monthly and will be calculated depending on the borrower’s loan amount.
On top of the credit score specifications, the FHA will also take a close look at a borrower’s residency, employment records and ability to pay the loan. If you’re eyeing an FHA loan approval, you must pass residency requirements and have a steady employment history. You must also be clear from bankruptcy for at least two years. Moreover, the FHA will also request a comprehensive copy of all your debts, so you must have that one on hand as well.
The limits of the loan
The maximum loan amount insured by the FHA differs by state and county. The limit changes annually so it is important to keep an eye out for the FHA’s most updated list. You may refer to this link to check on the lending limits in different Texas counties for 2017.
Loan interest rates
Like lending limits, the loan interest rates are not set in stone. They constantly change depending on a number of factors. Check with our mortgage officers to get the most recent rates that could be applied to the loan you are planning to apply for.
Once you’re clear on the basics of an FHA loan, you can already get in touch with an FHA lender. To get you through the process in a quick and convenient way, you could also apply online. Online loan applications are fast and convenient – a savvy option for modern homebuyers like you. Click here to get started on your online loan application.
Texas Lending offers a free personal consultation to help Texas homebuyers decide on a home loan that suits their needs and their financial capabilities. Contact our loan officers for a more thorough discussion on FHA loans in Texas and other home loan options.