If you are shopping for your first home, an FHA loan insured by the Federal Housing Administration (FHA) may be ideally suited to your financial situation and your goals for your future.
While FHA mortgages are popular among first-time homebuyers in Phoenix and across the country, they do have third bandages and disadvantages. Let’s take a quick look at some of their pros and cons.
Pros of FHA Loans
- Your down payment on an FHA loan could be as low as 3.5%. This is one of the lowest down payments you will find for any type of loan. There are some options for lower down payments, however, such as 3% conventional loans or zero-down VA loans.
- Credit score requirements for FHA loans are flexible so that first-time homebuyers and others who apply have an easier time qualifying.
- The debt-to-income (DTI) ratio requirements for FHA mortgages also are not as strict as they are for some other types of home loans. This can be very helpful if you are still paying off student debts and/or are earning an entry-level salary.
Cons of FHA Loans
- It is required when you take out an FHA loan that you also purchase private mortgage insurance (PMI). As this requirement does not expire, the only way that you can get out of it in the future is to refinance into a different type of mortgage.
- Another potential drawback of an FHA loan is that the strict inspection requirements will probably prohibit you from purchasing a home which requires a lot of repair work. If you are specifically shopping for distressed property or if you simply have fallen in love with a fixer-upper, an FHA loan may be too restrictive for your needs.
Is an FHA Loan Right For You? Let Barrett Financial Group Help You Find Out
FHA loans in Phoenix are a suitable option for many homebuyers, whether they are shopping for their first home or not. But there are situations where another type of loan might be more appropriate.
If you are not sure what type of loan to apply for or you have questions about FHA mortgages and other types of home loans, we would love to provide you with the detailed answers you need during your consultation. To get started, please call (480) 470-1080. We look forward to helping you with your FHA loan in Phoenix.