FHA loans are more accessible and less risky than other loans, making them attractive to borrowers with less than perfect credit and limited income. They also require smaller down payments and allow for lower closing costs, reducing the amount of money needed to get into a home.
In order to apply for an FHA loan in 2016, one must meet certain criteria. This includes having a steady job for the past two years, a credit score of at least 580, and a debt-to-income ratio under 43%. All applicants must also complete a minimum of 12 months of on-time payments on existing accounts. Additionally, FHA loans require an appraisal to determine the value of the property being purchased.
The process of applying for an FHA loan is fairly straightforward. After meeting the basic eligibility criteria, potential borrowers must fill out a mortgage application and provide information about their income, assets, and debts. The lender will then perform a credit check and review the applicant's finances and employment history. If approved, the borrower will then be required to pay an upfront mortgage insurance premium (MIP) at closing.
Once the mortgage is approved, the borrower will then need to close on the loan. This involves signing all necessary paperwork, making sure all the documents are in order, and paying any associated closing costs. It can take several weeks for the loan to finalize, so it’s important to be patient through the process.
Overall, applying for an FHA loan in 2016 is a great option for anyone looking to purchase a home. Not only is it more accessible than most other types of mortgages, but it also requires less money up-front. Borrowers should make sure they meet all the necessary criteria and understand the process before committing to an FHA loan. With the low interest rates and flexible terms of FHA loans, it’s highly likely that even more people will be turning to them to purchase a home in 2016.
Summary:
FHA loans are attractive to potential borrowers due to their more accessible and less risky nature. In order to qualify for an FHA loan in 2016, applicants must have a steady job for two years, a credit score of 580 or higher, and a debt-to-income ratio below 43%. Applicants must also have made 12 months of on-time payments on existing accounts. Upon approval, an upfront MIP will need to be paid at closing, which includes signing relevant paperwork and paying any closing costs. The entire process can span several weeks, so patience is key. Overall, FHA loans offer low interest rates and more flexible terms, making them a great option for those looking to purchase a home in 2016.
This article was contributed on Oct 20, 2023
