We’re here to provide excellent mortgage loan options for first-time homebuyers at Wasatch Peaks Credit Union, and some of the best options on our list are federally-backed loan options. These programs are guaranteed or insured by arms of the government, lowering risk for lenders and allowing you to get better mortgage rates and qualify for more advantageous loans.
A great example here is an FHA loan, insured by the Federal Housing Administration. They offer several more flexible options than many conventional loans. Here’s how you can benefit from an FHA loan.
There are several areas where the requirements for qualifying for an FHA loan are much lower than they would be for a similar loan in a different format. Credit score is the most important: Only a 600 minimum credit score is typically required for an FHA loan, with some wiggle room depending on the institution.
There are other qualification benefits as well. You will be required to pay a much smaller down payment, as low as 3.5 percent rather than up to 20 percent for most traditional situations. There are no prepayment penalties, either. This makes these loans perfect for first-time homebuyers.
The rates you can get through FHA loans far outstrip those you’ll find through the equivalent standard loan. If you have a credit score of 660, for instance, this will qualify you for an FHA interest rate roughly equivalent to what a score of 740 would have qualified you for in a conventional format.
FHA loans are perfect for refinancing. They allow options for members who got their first mortgage from outside lenders, never a guarantee during a traditional loan situation. They’re offered in both fixed and adjustable rates, and you can typically refinance up to 98 percent of a home’s value.
When a buyer is allowed to take over an existing home loan from someone else rather than taking out a new one, this is called an “assumable” loan. FHA loans fall under this classification, meaning you can pick the best option between assuming a previous loan at its rate and looking for a new loan with a better market rate. There are no penalties here in either case.
Want to learn more about FHA loans, or any of our other mortgage services? Speak to the financial advisors at Wasatch Peaks Credit Union today.