If you are in the market for a first home or a starter home for a new family, there are many options to keep in mind that an FHA home loan can help you with. Which one of these FHA mortgage loan options is right for you?
FHA 203(b) New Purchase Home Loans For First-Time Buyers And Return Borrowers
If you are interested in a typical suburban home for your first house hunting adventure, the FHA 203(b) Mortgage is the right one for your needs. These home loans are for existing construction properties that don’t need extensive repairs and are intended for those who plan to own and occupy the home as their primary residence.
FHA 203(k) Rehabilitation Loans For Fixer-Upper Homes
The FHA 203(k) rehab loan is the one you want to ask your lender about if you are interested in buying a fixer-upper home you intend to live in once the repairs and other work is done.
These loans combine the cost of buying the home and the cost of the repairs; borrowers should know that an FHA-approved builder may be required but this is designed for the protection of both the borrower and the lender.
These loans are a bit more complex than the standard FHA 203(b) loan mentioned above, but they do not have higher credit score requirements than the 203(b) nor do they require the borrower to make a larger down payment unless the applicant’s FICO scores are not within the FHA and lender requirements for maximum financing.
No matter what loan you choose, these standards are identical with one exception, which we’ll examine below.
FHA One-Time Close Construction Mortgages For First-Time Borrowers And Repeat Borrowers
One-Time Close mortgages, also called construction-to-permanent FHA loans, are designed to help a borrower who wants to buy land or provide land already owned for building a new house upon. The general down payment and FICO score requirements for these loans are identical to the other FHA loan minimums, but many lenders require higher FICO scores for this type of loan.
You will need to ask your loan officer what additional requirements may apply above and beyond FHA minimums.
FHA construction loans are good for those who are not in a hurry to move into the new home; the construction phase of the mortgage will require time to complete properly and borrowers should be aware that they will need to reside elsewhere until the home has been inspected and approved.
Ask your loan officer about these FHA mortgage loan options and how they can help a first time buyer or repeat home loan customer.