New Homebuyers Are Flocking to FHA Loans — Here’s Why
New home sales are on the rise, and many of those purchases? They’re being made with FHA loans.
According to a recent analysis from the National Association of Home Builders, almost 18 percent of all new home sales were purchased with FHA mortgages last quarter — or about 32,000 home sales nationwide. That’s a 7-point increase over last year and the highest share of FHA new home sales in more than six years.
The jump shouldn’t come as too big a surprise, though. Today’s low mortgage rates, combined with the many perks of FHA loans, can make homeownership much more affordable for many Americans — particularly first-time buyers.
Here’s just a quick glimpse at what FHA loans can offer:
- They can lower the barrier to entry for homeownership. You don’t need stellar credit to qualify for an FHA loan, nor do you need balance-free credit cards. They’re one of the easiest types of loans to qualify for, from a credit standpoint.
- They can help you buy a home sooner (and for less cash). With an FHA loan, you don’t need to save for years and years to bank a 20 percent down payment. As long as your credit is over 580, you need just 3.5 percent down.
- They can get you back on your feet. Having a past bankruptcy or foreclosure doesn’t preclude you from getting an FHA loan. You may have to wait one to three years before applying, but you can still get approved for your loan with these marks on your record. If the events were a result of extenuating circumstances, the waiting period can often be waived as long you’ve been making your housing payments on time for 12 months prior to the case assignment date and remain current at the time of close.
The bottom line is that FHA loans can potentially offer an easy, affordable route to homeownership, especially if you’re short on cash or your credit is less than perfect. But keep in mind: they’re not right for everyone. FHA loans do require mortgage insurance, which can add both an up-front and annual fee to the equation. You will also have to have your home appraised to ensure it meets all HUD requirements.
Is an FHA Loan Right for You?
Are you considering using an FHA loan to buy your dream home? Then get in touch with an Embrace loan officer today. We’ll walk you through the details and help you figure out if you qualify.