The higher your credit score, the lower your required down payment.
Although FHA loans do not have as strict requirements as other bank
loans, this does not mean that credit scores are irrelevant. According
to FHA online, only homebuyers with a minimum score of 580 are eligible
for the lowest 3.5 percent down payments. Buyers with credit scores
below 580 are required to pay a minimum of 10 percent for a down
payment. Boost your credit rating by paying bills early or on time and
keeping credit card balances low.
Find Your Niche
The FHA offers specialized loan programs for a wide variety of
groups, including first-time homebuyers, seniors and manufactured and
mobile home owners. 203(b) Mortgage Insurance is a program for
first-time homebuyers that offers the lowest down payment percentage for
one- to four-unit, owner-occupied homes. Seniors who are at least 62
years old may qualify for a reverse mortgage, which allows them to
convert equity into cash with no repayment until they move to a new
property. FHA loans are also available to mobile and manufactured home
owners who either own land or live in a mobile home community.
Remodel and Go Green
The 203(k) loan program allows homebuyers to finance the home
purchase as well as any remodeling costs that may be required. You must
provide detailed outlines of the work needed, as well as costs that may
accrue, and submit them to an FHA 203(k) lender. Down payment
requirements are 3.5 percent of home and repair costs. Once the
application is approved, you will receive the purchase mortgage and cash
for estimated remodeling costs, plus an extra 10 to 20 percent of the
remodeling costs for any extra work that may come up. You can also
invest in making your home more energy-efficient. An Energy Efficient
Mortgage (EEM) can also be combined with 203(b) and 203(k) loans. These
mortgage programs are provided by lenders and insured by the FHA, just
like other FHA loans. They allow you to make energy improvements to the
home with no additional down payment or prerequisites.