If you’re planning to purchase a Beacon Hill Boston condo for sale, it’s important to understand the different types of loans available to you. Many potential home buyers are eligible for something called an FHA loan. If you are unfamiliar with this type of loan, this article provides the basic important information you need to know.
FHA is a government agency
The Federal Housing Administration, or FHA, is a government agency. An FHA loan is insured directly by this agency. Since the loan is insured, lenders can offer more incentives to the borrower such as lower interest rates, more flexible qualification requirements, and low down payments and closing costs. Because the requirements are less stringent than conventional loans they are a good option for first-time home buyers.
Low down payments with FHA loans
A huge incentive to using an FHA loan is the low down payment requirement. In most cases, the requirement for an FHA loan is 3.5 percent down. Borrowers can use funds from their own accounts or they can be gifted the down payment amount by a family member. They can also receive the down payment in the form of a grant through an assistance program funded by a state or local government.
FHA credit scores
For a mortgage to qualify for a down payment of 3.5 percent, the borrower must have a credit score of at least 580. Borrowers with a credit score between 500 and 579 have a down payment requirement of 10 percent or more. Those with credit scores under 500 are usually not eligible for FHA loans.
Conclusion
On all FHA loans, there are two kinds of insurance premiums required. There is an upfront premium paid at the time of loan generation. This amount is 1.75 percent of the loan and can be paid at closing or it can be included in the financing of the loan. The second premium is called the annual premium and is paid as part of your monthly mortgage payment. This premium varies and is based on the loan-to-value ratio as well as the term of the loan.
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Condos around the Beacon Hill area to rent:
Back Bay area condos for rent
Beacon Hill area condos for rent
Charlestown area condos for rent
Navy Yard Charlestown area condos for rent
Dorchester area condos for rent
Fenway area condos for rent
Jamaica Plain area condos for rent
Leather District area condos for rent
Midtown area condos for rent
Seaport District area condos for rent
South Boston area condos for rent
South End area condos for rent
Waterfront area condos for rent
North End area condos for rent
West End area condos for rent
East Boston area condos for rent
