FHA mortgages have had a bad reputation lately and there are times that this is the best mortgage for you.  Everyone is different and if you have great credit and at least 5% down, conventional is probably the better mortgage for you.  But don't be afraid of FHA mortgages!  There are some benefits to FHA mortgages – here is a list of reasons to use an FHA mortgage!

1. FHA loans allow for a low down payment and have flexible guidelines on where that down payment can come from. Gift funds and some down payment assistance programs are not an issue.

2. More flexible on credit requirements. FHA has a much lower credit requirement than lenders, but the typical 640 minimum score that most lenders require is still very low.

3. Rates are typically lower than a conventional mortgage and come with higher overages available to you to offset those closing costs.  Lenders can help you by paying some of your closing costs.

4. The underwriting guidelines are much more relaxed than a conventional mortgage.  FHA allows you to purchase a home 3 years after a foreclosure and 2 years after a bankruptcy.  Conventional loans require a longer waiting time.

5. The one most people forget about and shouldn’t—the fact that FHA loans are assumable. This means when you go to sell your house, let’s say seven years from now, this is a selling point to your potential buyer. If rates are at 5.5% and you can offer them an assumable mortgage at 3.5%, that will help sell your home faster!

There is also some discussion about a new program with FHA loans that will allow you to lower the mortgage insurance.  This is still in the works but may be rolled out later this year.  It would involve taking a first time homebuyer class and maybe some individual counseling.

If you are thinking about buying a home, talk to your loan officer and find out about both conventional and FHA mortgages.  Once you know more about your own situation, you can decide which program is better for you!

Leslie Vanderwerf,  NMLS ID#335509, American Mortgage & Equity Consultants, NMLS#150953 - Email - Website

About Leslie Vanderwerf

Currently a Branch Manager for American Mortgage and Equity Consultants, Inc., it's hard to believe I have been in the mortgage business for more than 25 years and have worked with Sharlene since 2000! I love sharing mortgage insights here each week and helping people finance their homes. Listening helps me find the right program for you!

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