Everything You Need to Know About FHA Mortgage Rates
FHA mortgage loans are backed by the Federal Housing Administration. The government has to step in, of course, because private lenders would otherwise not serve a section of otherwise risky consumers. There is a price for such an intervention. FHA mortgage rates are somewhat higher than conventional loan rates and VA home loans. However, they’re not much higher. And, depending on the situation, they can be a great option for some home buyers. Here’s what you need to know about FHA mortgage rates.
FHA Mortgage Rates Explained
FHA mortgage rates are only about 0.25–0.5 percentage points higher than the conventional rate typically. This difference, however, is highly subjective and depends upon the nature of the economy at any given time. Even that tiny difference can translate into tens of thousands of dollars over the 30 years. But does this mean that one should steer clear of the FHA option? The answer is it really depends on your situation.
Relaxed Credit Considerations
The FHA has rather relaxed credit considerations in general. So if you have been trying to rebuild your credit, but can’t wait to take out a mortgage, you may want to consider what the FHA has to offer.
Low Down Payment Requirements
Conventional mortgages tend to require a substantial down payment. However, an FHA loan allows you to purchase a home with a low down payment. Most of the time you are only expected to put down about 3.5% upfront, which is substantially lower than other financing options on the market.
Private Mortgage Insurance Is Often Required
Lenders want to be protected against loss when making a risky loan. As a result, FHA loans often require borrowers to take out private mortgage insurance. This is usually tacked onto your monthly mortgage payment and helps protect the bank making the loan.
Is an FHA Loan Right for You?
Buying your own home is part of the American dream and FHA loans help make that a reality for many. Our loan experts at Mortgage Solutions Financial can give you current FHA mortgage rates and answer any questions you may have. We can help you understand what your options are and help you decide the best financing to make your dream of homeownership a reality.