Advantages and Benefits of FHA Home Mortgage Loans
Qualification
FHA Home loans are simply easier to qualify for than conventional home loans. FHA loans have a lower credit score qualification of 620 and many have qualified for FHA loans with credit scores down to a 560. The reason for this is because FHA insured lenders are more concerned with the borrowers ability to repay then current loan and less concerned with past credit adversities. With as low as a 600 credit score, one can qualify for for a FHA home loan and receive the same rate (around 5.00% )as someone with a 720 credit score.
Compared to a conventional loan:
Conventional loans mainly require a borrower to have a 660 score or greater to qualify for their best rates which are about equal to FHA rates. With a conventional loan a credit score below 660 will normally yield a higher interest rate and monthly payment.
Click here to see if you qualify for a FHA Home Loan
Down Payment
FHA mortgages allow you to purchase a home and put down only 3.5% down payment with a as low as a 580 credit score. This and this alone is the most advantageous benefits of FHA home loans and is what makes owning a home practical feasible. The best part of FHA's low down payment requirement is that you do not get penalized for having a lower credit score. Once you qualify for a FHA loan you qualify and that's it; you get all the benefits of a low fixed rate and low down payment option if your credit score is 620 or 750.
Compared to a conventional loan:
You can qualify for a conventional loan in some cases with a lower credit score as well. However, if your credit score is below 700 you will have to put a down payment of 20%. Why? - because conventional loans that exceed 80% loan to value require Private mortgage insurance or PMI. PMI companies will not issue mortgage insurance on a conventional loan unless the borrower has a 700 credit score or better.
