If you’re planning to purchase a home this year, whether you’re a first-time homebuyer or not, you must keep in mind that there are plenty of various home loans for you to consider. Without applying for a home loan, you will have difficulty paying for your house using money straight from your pockets than borrowing from a moneylender.
This year, the loan limit for an FHA loan in Texas has increased up to $356,362. If you aim to buy a single-family home, the limit is $416,300, but it will still depend on the county. For most counties within the state, you can rely on the lower amount. But if you’re choosing a home close to big cities, you could qualify for the larger price, or even more.
Keep reading below to learn more about FHA loans to give you a better idea of what you’re signing up for and why you need one if you want the homebuying process to run smoothly.
A Closer Look at an FHA Loan
If you need a mortgage loan, you could think of applying for an FHA loan; a program backed up by the Federal Housing Administration (FHA). Moneylenders approved by the FHA provide loans insured by the federal government to help them avoid facing loss the moment a borrower backs out on their home loan payments.
The government established the FHA program to try and solve the sudden foreclosures and non-payments that occurred during the 1930s. Its mission is to give mortgage lenders the proper protection in the form of insurance while making loans attainable to people in need, especially first-time homebuyers.
Benefits of Getting an FHA Loan
Homebuyers looking for a mortgage loan that’s relatively easy to apply for may want to opt for an FHA loan due to its low down payment and not too strict requirements. It can be a struggle for many individuals to apply for a loan when they have bad credit or have experienced going bankrupt, but not for an FHA loan.
The required down payment is 3.5% only, which is a big difference from other standard loans or private mortgage insurance that demand a 20% down payment. Having an FHA loan gives you an advantage because it can be assumable, so when you plan to sell your home in the market, an interested buyer can assume the loan you own.
Candidates for an FHA Loan
The requirements for applying for an FHA loan are more accessible to attain than choosing to apply for a traditional loan. You need to prove you have a stable employment background or demonstrate that you’ve been with the same company in the past two years.
You should also be legally residing in the US, have a valid Social Security number, and be of legal age to grant you the authority to sign a mortgage in the state you want to live in one day. If you wish to target the new FHA loan, you are only allowed to use it for primary residences.
Other requirements include obtaining a property appraisal from an FHA-approved appraiser, a front-end ratio less than 31% of your gross income and a back-end ratio of less than 43% of your gross income. Homebuyers who face bankruptcy and wish to purchase a property must prove that they’ve been out of it for the past two years and have rebuilt their credit score.
When you insist on purchasing a home, although you’ve only been out of bankruptcy for over a year, it can come with exceptions to the rule based on your situation. Homebuyers interested in an FHA loan yet face foreclosure must be out of it for three years and have acquired good credit again before proceeding with their application.
If you’re aiming for an FHA loan in 2021, you still have a couple of months to consider before the year ends. You could have an easier time applying for the loan if you worked with a mortgage broker to help guide you through each step of the way. They will connect you to dependable moneylenders and assist you with preparing your documents on time to ensure you acquire the property you want within a shorter period.
Are you looking for FHA loans in Dallas, Texas? New Frontier Financial is a full-service mortgage broker striving to help our clients attain their objectives of investing in real estate, including purchasing or refinancing a home. Get in touch with us today at (469) 886-8300 to apply for an FHA loan!