Did you hear about FHA loans for bad credit offers? If you have received offers about getting an FHA loan with no down payment, be wary because FHA single-family home loan programs do not offer any downpayment option.
FHA is a government-backed loan program, but unlike the VA mortgage loans, where borrowers don’t need a downpayment, FHA loans require it. VA loans are for qualified veterans, active duty military members, and qualified surviving military spouses.
FHA loans for bad credit
While there is no zero down payment privilege for FHA loans for bad credit, there are available options for borrowers in the “bad credit” category. There may be assistance offers for down payments, first-time home buyers, or buyers in dire financial need. Depending on which state you are located, local programs offer help for borrowers in this situation.
When availing of these offers, although the FHA doesn’t offer down payment assistance programs directly, they can help refer borrowers to HUD-approved agents for counseling and down payment assistance programs available in the area.
Be aware that FHA loan has strict rules regarding identifying the source of your down payments. You will need to disclose where the funds came from and, if applicable, from whom your down payment assistance came.
What else to prepare for aside from the down payment?
The minimum down payment requirement for an FHA loan is 3.5%. But this is not the only upfront fee that you need to prepare for. Part of the FHA closing costs is the Mortgage Insurance Premium (MIP) which will come up to 1.75% of your loan principal, lender fees (depending on the FHA lender of your choice), and other costs like underwriting and application fees, among others.
The best thing to do now is to talk to trusted lenders and ask for more details regarding FHA loans for bad credit.