If you’re in the market to buy a home, it’ll be important to get your long-term financing strategy in order. Buying a home, after all, typically requires a series of payments. After you make a down payment, you’ll still need to bear in mind the cost of paying off a mortgage. Thankfully, an FHA loan can reduce the stress (and cost) of the homebuying process.
Here’s everything you need to know about FHA mortgage rates in 2020!
An Introduction to Federal Housing Administration Loans
A FHA loan is a housing mortgage that is backed by the Federal Housing Administration (FHA). However, these loans are not issued by the FHA. Instead, the Federal Housing Administration maintains a list of pre-approved lenders that applicants will need to work through.
FHA loans are most commonly leveraged by low-to-medium income homebuyers. One of their biggest appeals is that they require lower minimum down payments than other popular loan options. Additionally, FHA loans have less stringent credit score requirements, which means that some applicants with suboptimal credit may still qualify.
How to Qualify for a FHA Loan
As mentioned above, it’s banks and private lenders – not the FHA itself – that are responsible for reviewing FHA loan applications. These lenders will work with you directly to ensure that you’re eligible for a loan given your financial history.
Applicants for a FHA loan will also need to invest in mortgage insurance. This is essentially a mandatory precaution to protect the FHA if you’re forced to default on your loan. If you decide to apply for a FHA loan, be sure to factor in the monthly premium costs of mortgage insurance.
What Are the FHA Mortgage Rates in 2020?
Like all loan programs, the rates for the Federal Housing Administration loan are constantly fluctuating. Generally speaking, the FHA loan is a more affordable option than most conventional loans. That said, there are some years that are more costly than others.
Here’s a closer look at the need-to-know details for the FHA mortgage rates in 2020:
- This year, homebuyers can borrow as much as 96.5% of a home’s total value through a FHA loan.
- A FHA loan in 2020 will require a down payment of 3.5% of a home’s total value.
- FHA loan rates and APR vary between lenders. Use this calculator tool to find competitive rates in your area!
Apply for a FHA Loan Today
At Mortgage Solutions Financial, we specialize in making the loan application process easy for first-time homebuyers. Contact us today to learn more about the FHA mortgage rates in 2020 or to get started on your application!