Owning the perfect home in the perfect city, in the perfect neighborhood is a dream for most. While buying a home is one of the most exciting times in your life, it is a huge undertaking. In fact, a home is one of the largest investments you will make in your life. For many, this can seem like an overwhelming process. This is especially true for those who are financially strapped and have either been declined a conventional loan or believe they will not be eligible for a conventional loan. What most are not aware of is that there are loans available for those who do not have as much cash to put down up front. FHA loans and the Home Possible loan are two types of loans which are alternatives to the conventional loan.
What is an FHA Loan?
An FHA (Federal Housing Administration) loan is known as a home loan option for those who have difficulty obtaining conventional loans. The main appeal to an FHA loan is the difference in the down payment needed up front. FHA loans require a smaller down payment, sometimes as little as 3.5 percent.
Compared to a conventional loan, buyers can typically get approved for an FHA loan with a lower credit score. Lenders tend to be more relaxed when it comes to approving buyers for FHA loans. The reason for this is the FHA promises to repay the lender should the buyer default on it. This is a government home loan that is backed by the Federal Housing Administration, meaning there is less risk to the lenders.
What is a Home Possible Loan?
The Freddie Mac Home Possible loan is geared towards first time home buyers. At least one of the borrowing parties must be a first time home buyer in order to be eligible. This type of mortgage is meant to encourage potential home buyers to pull the trigger on their first homes. Even though this is considered a conventional mortgage, it is backed by Freddie Mac so the down payment needed is typically lower at around 3 percent than a traditional conventional loan. Home Possible loans also typically have reduced mortgage insurance rates, refinancing options, and even flexible credit terms.
Can You Purchase a Multi-home Property?
Many people just assume that potential buyers can only purchase single-family homes when using an FHA loan. This couldn't be further from the truth. In fact, those who are looking at purchasing a multi-home property can buy a property with up to four living units under the FHA guidelines. You are then allowed to rent out unused living units if you so desire.
The Home Possible loan has the same unit restrictions as the FHA. The borrower may purchase a property with up to four units on it. In order to finance manufactured homes, they must first meet certain criteria. It is of the utmost importance to have an inspection of the property conducted beforehand.
Purchasing a Home is Within Reach
For those with limited financial resources, it can seem that purchasing a home is out of reach. However, with so many options out there, owning your own home is closer than you may think. The knowledgeable experts at First Savings Mortgage, understand how overwhelming it can be to purchase a home. First Savings Mortgage is the most trusted lender in the DC metropolitan area. They can help you understand all of your mortgage loan options and find the home mortgage loan that is right for you and your financial needs. Contact us today as your preferred lender and begin your journey to home ownership.
Please note, by refinancing your existing loan, your total finance charges may be higher over the life of the loan.