For first-time homebuyers and others looking for competitive financing in Seattle, Bellevue, or anywhere in Washington, FHA loans offer affordable rates and friendly terms.
What is an FHA Loan?
An FHA loan is a mortgage which is insured through the Federal Housing Administration. With FHA backing, these types of loans are less risky from a lenders perspective. This is what makes it possible for them to offer excellent benefits to qualifying applicants.
What Are the Benefits of a Seattle FHA Loan?
If you qualify for an FHA loan in Seattle or elsewhere in the state, here are some of the advantages which you can expect:
- Depending on your credit score, your down payment could be as low as 3.5%.
- Your credit score does not need to be ideal in order to qualify for the program or to get competitive interest rates and terms on your loan.
- Closing costs for FHA loans tend to be affordable, and in some cases, may even be paid in full by the seller.
- It is up to you whether you want to apply for an FHA loan with a fixed rate or an adjustable rate.
- FHA loans are available for multiple purposes. With an FHA-insured loan, you can build or buy a home or make renovations to a home you already own. You may also refinance or consolidate your debts.
Who is Eligible for an FHA Loan in Washington?
While FHA loans are popular among first-time homebuyers in Washington, is a misconception that you need to be purchasing your first home in order to apply for an FHA loan and be approved.
Following are the requirements for approval:
- If you would like to qualify for a 3.5% down payment, you will need a minimum credit score of 580. Even if your credit score is as low as 500 however, you may still be eligible for an FHA loan with a 10% down payment.
- Your debt-to-income ratio should be a minimum of 43-45%.
- You must be steadily employed, and must be able to document that you have been so for the past two years.
- It is okay to have a foreclosure or bankruptcy on your record, but at least two years must have passed since the bankruptcy. Three years must have passed since the foreclosure.
- An FHA loan can only be used to purchase a property which will become your primary residence.
- Your credit alert interactive voice response system (CAIVRS) report cannot contain any items.
All told, the FHA loan program is a flexible one, and many homebuyers can benefit from it, whether they are purchasing their first home or not.