FHA loans have become very popular for mortgage borrowers for many reasons. Primarily the require a lower down payment and the lending standards are not as restrictive as many other types of home loans.
FHA loans are insured by the Federal Housing Administration. By paying for mortgage insurance, the lender is protected from a loss should a borrower default on the loan. For many the extra cost is worth it to be able to get financing.
Those with credit scores between 500 and 579 must make down payments of at least 10%. Minimum credit scores for FHA loans depend on the type of loan the borrower needs. To get a mortgage with a down payment as low as 3.5%, the borrower needs a credit score of 580 or higher.
People with credit scores under 500 generally are ineligible for FHA loans. The FHA will make allowances under certain circumstances for applicants who have what it calls “nontraditional credit history or insufficient credit” if they meet requirements. Ask your LifeTree loan specialist if you qualify. FHA allows the borrower to use their savings towards the down payment. Also other sources of money, such as a family gift are allowed.
In SC, call LifeTree Lending today at (843) 375-5900. Let a licensed loan originator work with you to determine if FHA is a viable solution for you to buy that home you are dreaming about.