3.5% IS YOUR MAGIC NUMBER!
An FHA Loan, although requiring a low down payment, does have more strict guidelines and standards than a conventional loan product. Borrowrs will pay a higher PMI rate of 1.75% upfront and 1.35% annually on their FHA Loan. Because FHA Loans are backed by the government they will also be held to strict underwriting guidelines throughout the process in order to ensure the loan will not default. The property must meet certain guidelines during the appraisal process and if issues are noted, be fixed before the loan can be finalized. The processing timeframe on an FHA loan can take up to 45 days due to these guidelines.
Homebuyers interested in having a low down payment should really consider utilizing an FHA Loan. If you are ready to buy now but don’t want to wait until you have saved the 20%, then an FHA loan product is for you. Why throw money at high rent costs when you could begin to invest in your future by purchasing a home?
I am available to help answer any questions you, friends or family may have. I am your resource for all your home financing needs.
-Your Mortgage Coach Zach