If you’re a low-income earner in Utah, you may feel that life dealt you with a bad hand and think that home ownership is merely a pipe dream. Nobody can blame you for having that notion after lenders denied your mortgage application one after another. Being asked to try again after rebuilding your credit or lowering your debt ratio doesn’t inspire optimism.
Fortunately, it’s not the end of your story. Just because no lending institution has enough faith in you to give you the nod doesn’t mean you’re destined to rent forever. In case you’ve been living under a rock, government-backed loan exist to help you and your family buy a roof over your heads.
Insured by the Federal Housing Administration, FHA loans are the answer to the prayers of low-income owners like you. Why these mortgages are such a godsend, you think? There’s a long list of reasons, but none bigger than these three:
Low Down Payment
Principal and interest aside, paying thousands of dollars’ worth of down payment is almost impossible for many Utahans. But in an FHA loan, you can down for as low as 3.5% of the purchase price. If you have an acceptable donor willing to fund it for you, you don’t even have to pay anything. Small, or zero, down payment certainly paves the way for home ownership among low-income earners.
Lax Credit Requirements
As FHA loans are meant for the financially challenged, you can qualify if your credit score is below 580—just as long as it’s not lower than 500. Be it a new purchase or an FHA streamline in Utah, the process is fast with minimal income and asset verification.
The government and the lender consider your business less risky, primarily of the small repayments, which is why expect your application to be relatively effortless compared with conventional loans.
You can pass your FHA loan to someone else in the future, which can be advantageous for prospective buyers should the interest rates significantly rise in the future. Not that it should be your main objective of obtaining this mortgage, but knowing you can use it as selling tool later on doesn’t hurt anybody.
While FHA loans are tailored for low-income Americans, they’re not all rainbows and butterflies. Experts from City Creek Mortgage highly recommend working with an experienced broker to learn all the features of this type of mortgage before you sign anything.