Buying the home of your dreams is one of the most exciting and rewarding things that you can do. It's also likely to be the biggest investment of your life up to this point. But, it can also be incredibly confusing for some Sacramento, CA home buyers who are trying to find the right loan. Shopping for your home is hard enough, but that's also enjoyable. Shopping for a mortgage loan can be more complex and far less fun.
FHA Loan Basics
For many shopping for their dream home in Sacramento, CA, the FHA loan is an appropriate option available. It offers a great path to home ownership and is more attainable than ever before. Learning a few facts about it is important. FHA loans are backed by the Federal Housing Administration. This guarantee from the government allows lenders to extend loans with less stringent qualifications and with better terms. In turn, the FHA borrowers will pay for mortgage insurance that protects the lender from a loss.
Top Things To Know
Great for first time home buyers as well as those who are struggling to qualify for a loan elsewhere, FHA loans have less stringent requirements than other loans and offer numerous benefits. Here's a look at qualification requirements and other info worth knowing.
- The Minimum Down Payment Is Lower - Unlike traditional loans that require as much as *20% down, FHA loans require only that you have *3.5% of the home's total purchase price as a down payment.
- Your Lender Must Be Approved - The FHA doesn't actually provide the loans. They only secure them. As such, you'll have to get your FHA loan directly through a lender that offers FHA loans and that has been approved by the FHA.
- Closing Costs Could Be Included - FHA loans do allow you to include closing costs in the loan total. However, in these instances, you may end up paying a higher interest rate.
- Home Repairs Can Be Included As Well - The FHA has a special program that allows you to take out a 203K loan. This includes money that can be used to repair and remodel a home that is being purchased.
- Mortgage Insurance Is Required - If you pay less than *20% down on your home, you'll have to pay mortgage insurance including an Upfront Premium paid when you get the loan and an annual premium that is paid over the course of the loan.
- Loan Limits Change - Every year the FHA adjusts the maximum and minimum loan amounts. Currently, FHA loans can be between $294,515 and $679,650.
Getting Your Loan
Getting the perfect loan isn't always easy, but our team is here to help. If you're ready to buy a CA home, we are here to ensure that you get a loan that suites your needs, including FHA loans. Contact us today to get started and turn your dream home into a reality.
Example FHA Loan:
*FHA 30 Year Fixed: Loan amount $300,000, 3.5% down, monthly payment without taxes and insurance $1,501.74, APR 5.395%, FHA monthly MI is $211.00.
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