There are many benefits to an Orlando FHA mortgage over their conventional cousins, but among the most favorable include lower down payments and less restrictive credit-qualifying guidelines.
Orlando FHA mortgage loans are meant to encourage home ownership, and so the FHA insures loans taken out by borrowers in order to limit the risk taken on by lenders.
All in all, there are some key benefits to Orlando FHA mortgage loans that any Orlando mortgage borrower should understand before taking advantage of these programs.
Top 10 Reasons to Get an Orlando FHA Mortgage
1.Orlando FHA Mortgage lenders allow you to take out up to 97% of the value of a home. Though, you’ll have to locate funds to cover a minimum down payment of 3.5% of the purchase price of your selected Orlando home, you can get all or some of this money in the form of gifts or grants. For Orlando FHA mortgage borrowers who are low on cash – especially if your’e starting out on your first home purchase – this mortgage program is a great fit.
2. Though there is no actual minimum credit score requirement, you will have better luck being approved for your Orlando FHA mortgage if you have a minimum FICO score of 620 or better. Additionally, having a foreclosure, bankruptcy, or short sale in your financial history won’t necessarily keep you out of the running, as lenders may consider approving your FHA mortgage if it’s been at least three years since a foreclosure or short sale and at least one year since a bankruptcy filing. You may have to write a statement explaining the circumstances of your bankruptcy filing and be able to show that you’ve managed your finances responsibly since you filed.
3. You do not necessarily have to have an established credit history to qualify for an Orlando FHA mortgage. However, you will have to be able to show a steady history of paying bills on time for things such as rent or utilities.
4. Orlando FHA mortgage loans can be used to purchase or refinance your home. The streamline FHA refinance is for mortgages already insured by FHA. What’s great about these streamline FHA refinance loans is that as long as you’ve been current on your mortgage payments, you won’t need a new appraisal or credit check. Depending on your lender, you may be able to arrange no-cost refinancing.
5. You may not need to have your home appraised if you’re going with an Orlando FHA mortgage streamline refinance. This is a HUGE benefit for you if you are currently under water on your mortgage, or if you owe more than the appraised value of your home.
6. Self-employed borrowers are not out of the running for Orlando FHA mortgage loans. If you’re self-employed, you’ll simply need to provide tax returns for the previous two years, a current balance sheet, and a profit and loss statement. If you’ve only been self-employed for one year, you might still qualify for an FHA mortgage so long as you can prove that you’ve had a stable employment history the previous two years and still work in the same field.
7. You might be able to finance the cost of fixing up a damaged or neglected Orlando home through an Orlando FHA mortgage version called a 203(k) loan. This program lets you get a mortgage for the amount of the purchase price plus the funds you may need to make repairs and improvements to a house you plan to live in as your primary residence.
8. You can defer some of the costs involved with your Orlando FHA mortgage because the seller of may contribute up to 6% of the purchase price toward your closing costs. We’re still very much in a buyer’s market, so there’s a solid chance that your seller will offer to pay some or all of your closing costs. Of course, you’ll need the seller to commit to paying these costs in writing as part of the purchase agreement.
9. You can obtain an Orlando FHA mortgage that has a fixed rate – so you don’t have to worry about fluctuating rates that can cause “payment shock!”
10. You won’t have to worry about a maximum threshold for debt-to-income ratios (DTI) if you opt for an Orlando FHA mortgage. However, if your DTI (the money you pay out vs. the money you bring in each month) is above 45% of your gross income, you’ll need to be able to present significant cash reserves (savings, retirement accounts, etc.) or be able to show that your debt is related to say, high college loan expenditures like law school or medical school costs.
In short, Orlando FHA mortgage guidelines are set up to offer you a lot of flexibility. If you’re just starting out, or have limited down payment funds, this may very well be the program for you.