Nick Steffl goes over the pros & cons on one of the most popular loan types for first time home buyers, the FHA Home Loan.
First of all, let’s go through the pros.
- You’re number one pro with this is that it’s going to be a lot easier for especially first time home buyers who have had a harder time qualifying for your conventional loan. With an FHA loan, there’s a lot more wiggle room. Especially when it comes to your down payment. Your conventional loan requires 20% to be put down for your down payment. But with the FHA loan, it’s only 3.5%. So, you don’t have to save up a huge, huge sum to get into your home. You can come in with just 3.5% down.
- Also, you can have a lower credit score. Usually a conventional loan is looking for about 650 credit score to be pre-approved for that conventional loan. So, even if you’ve got a credit score of about 580, you’ve got a pretty good chance of being pre-approved.
Now let’s talk about the cons of FHA loans.
- With your FHA loans the biggest con when it comes to this loan, is the fact that you’re going to have mortgage insurance on this loan. Usually a conventional loan is going to have the exact same thing if you put down less than 20%. Once you reach the 20%, you no longer pay it. But, with the FHA loan, you have that mortgage payment every single month throughout the entire life of the loan. The solution to that problem, though is just refinancing once you’re able to qualify for a different program. So eventually you can refinance and get rid of that mortgage insurance.
- Another con is that not all properties are approved for FHA loans. There are still plenty of properties out there. And when I’m sending you a search for properties that you’re looking for, I’ll make sure that if you have an FHA loan, we’re only looking for those FHA approved properties.
- And finally, your last con when it comes to the FHA loans is that there’s a limit as to how much you can borrow. With your FHA loan, your maximum here in San Diego in 2019 is going to be 690,000 dollars. So, with that amount of money you might not be able to buy the mansion that you’ve been looking for on the beach. But, you’re probably going to be having a really good time when it comes to finding the home that you and your family need.
So with that said, those are the pros and cons of the FHA loan. If you have any questions at all when it comes to the buying or selling process of your property. If you have any questions at all with real estate, that are real estate related, give me a call at 619-933-7155.