FHA First Time Home Buyer Loan

Prior to the introduction of the Federal Housing Administration�s entrance into the mortgage marketplace, lending guidelines were all over the map. There really was no universal loan program that all mortgage companies could follow which kept many potential buyers on the sidelines, especially first time buyers who could be asked to make a down payment of 20 or 30 percent or more. Today, the FHA First Time Home Loan Program requires a down payment of only 3.5 percent of the sales price and is the loan program of choice for those buying their very first home.

First Time Home Buyers choose the FHA loan over all other mortgage programs for multiple reasons. The most common reason is the low down payment mentioned earlier. Unless someone is eligible for a VA Loan or the property is located in a rural area and qualifies for a USDA mortgage, there really is no other loan program that asks for such a low down payment while still providing a very competitive interest rate.

Note that the FHA does not approve or otherwise handle any part of the evaluation process but individual mortgage lenders do. Lenders follow prescribed lending guidelines and in return they receive a guarantee from the FHA. The guarantee compensates the lender should the loan ever go into default. This guarantee is financed with two separate mortgage insurance policies, an upfront policy which is rolled into the loan amount and an annual one which is paid in monthly installments throughout the life of the loan.

And for those with blemished credit, FHA First Time Home Buyer Loans provide the lender with a bit more flexibility as it relates to credit history and credit scores. Unfortunately, too many potential first time buyers don�t take the first step because they mistakenly believe their credit past will keep them from their home ownership dreams. The FHA First Time Home Buyer Loan is more lenient as it relates to credit as compared to conventional loan programs with less than 20 percent down.

First Time Buyers can also select from a varied group of loan types. The most popular choice today for a mortgage is FHA�s 30 year fixed rate loan. The fixed rate loan ensures the principal and interest payment will never change at any point into the future while the 30 year term provides the lowest fixed payment. Other offered loan terms for first time buyers include a 10, 15, 20 and 25 year term. In short, the longer the loan term the lower the monthly payment.

FHA First Time Home Buyer Loan can also be in the form of an adjustable rate mortgage offered as a hybrid. A hybrid is an adjustable rate loan that is fixed for a predetermined period of time before turning into a loan that can adjust once per year. However, most first time buyers tend to own their first property for seven years or more and instead should consider a fixed rate term which is more easily planned for well into the future. Speak with an experienced loan officer to determine which program best suits your very first home purchase.













 First Time Home Buyer Loan