Have you been considering buying a home but a less than perfect credit score, or a lack of savings for a down payment has been holding you back? In this post, Homes for Heroes explains how you can break through those issues with FHA Home Loans for teachers. The FHA Home Loan has been helping more teachers become homeowners due to its less restrictive credit score and minimal down payment requirements.
FHA Home Loan Pros and Cons for Teachers
FHA Home Loan Background
FHA home loans are issued by qualified lenders and backed by the U.S. government’s Federal Housing Administration (FHA). It was created in 1934 following the Great Depression in response to the high amount of foreclosures experienced at that time across the U.S. It was designed specifically to help individuals who had low credit scores with limited access to savings.
Benefits of an FHA Home Loan:
- If teachers buying a home have a credit score of 500-579 they may qualify for an FHA loan if they are able to put down at least 10% as a down payment.
- Teacher home buyers with a credit score of 580 or higher can qualify for an FHA loan and put down as little as 3.5% for a down payment.
Disadvantages of an FHA Loan:
- UPDATE TO VIDEO: There is an Upfront Funding Fee of 2.25 percent of the total financed amount paid when you close on the loan.
- All FHA home loans for teachers must include Mortgage Insurance Premiums (MIP) for the life of the loan. The current rate for MIP is 0.85 percent and this payment is typically rolled into your monthly mortgage payments. MIP protects the mortgage lender in case you are unable to pay the loan back. This insurance is a big reason why teacher home buyers with lower credit scores and less cash to put down for a down payment still have the ability to purchase a house.
Generally, an FHA loan will cost a teacher home buyer more money over the term of the loan versus other home loans such as a conventional loan, VA loan or USDA loan due to the higher interest rate and MIP costs. But, it still allows you to get the home you want for you and/or your family!
Teachers can Offset Some FHA Loan Costs
Homes for Heroes mortgage specialists work on FHA home loans for teachers and provide significant savings on their lending fees to teachers like you. In addition, you will receive a Hero Rewards check valued at 0.7% of the home purchase price after you close on your new home when you use a Homes for Heroes real estate specialist to purchase your home. That’s how teachers like you can save an average of $2,400 on the purchase of your new home.
To get started, sign up today and Homes for Heroes will connect you with your local specialists. Those specialists will contact you to answer your questions, help you determine if the FHA home loan is right for you, and put you on the right path toward what you want to accomplish.
We would be honored if given the opportunity to work with you and we thank you for your service.