There has been a renewed interest in Indiana FHA loans recently, especially given the loss of the sub prime loans and the difficulty getting conventional loans for many borrowers. While many future purchasers believe that they are getting a loan through the Federal Housing Administration, in truth, FHA is really only an insurance company within the Department of Housing and Urban Development. Being that they are insured by the government, the actual lenders (banks, etc.) have less risk and are more likely to loan to borrowers who may be slightly risky in their minds.
Currently, tight credit markets are responsible for the slow down in home buying in the US. Despite these issues, now is one of the best times to purchase a home for a number of reasons. I’ll list the top 3….
- Interest rates are very low currently
- There are a record number of homes on the market to choose from
- Sellers are often very willing to accept concessions, including paying closing costs, to sell their homes.
Because of the government backing of these Indiana FHA loans, they are relatively easy to qualify for and have many benefits, especially compared to the conventional loan products that are available.
Some of these benefits include:
Small Down Payment – Indiana FHA loans currently only require a 3.5% down payment, as opposed to a minimum of 5% (and often more) with a conventional loan. Less money out of pocket makes getting into a home much easier, especially for a first-time home buyer.
Down Payment Assistance – While the true DPA programs where the seller could help make the down payment are gone, buyers that qualify for Indiana FHA loans can receive money for down payment as a gift from a family member or even as a wedding gift.
Lower Interest Rates – Because they are backed by the US government, the rates are often lower than other loans. In this situation, RISK = RATE. The greater the risk of the loan, the greater the rate and vice versa. Because these loans carry a lower risk because of the government backing, the rates are usually lower.
Low Minimum Credit Scores – Currently, a very small number of lenders will consider a score below 620, but the chance of getting approved for an FHA loan is fairly small. When compared to a conventional loan which likes scores in the high 600s and 700s, FHA loans are much easier to qualify for. While FHA gives the same price for any scores above 620, even the small difference between 678 and 682 can mean a difference of 1% in rate. On a $150,000 loan with only 5% down, that equates to about $96 a month when the rate drops from 7% to 6%.
Assumability – While this may not sound like a big deal now, if rates go up to 9% or 10% or more, you may have an advantage of being able to sell your home with the current interest rate attached. In terms of marketing, this is a huge ace-in-the-hole.
No matter what your financial situation is currently, we will work with you to qualify you for a loan in the shortest amount of time possible. Using our years of experience, we will guide you through the process and prepare you to purchase your own home.
Do you like the idea of the Indiana FHA loan, but need money to rehab your new or present home? Check out theFHA 203(k) Streamline loan. You can borrow up to $35,000 above the purchase price or current value for improvements as long as the improvements will appraise at the new value. We are currently able to loan in Indiana using the FHA 203(k) product that does not have a set borrowing cap and can be used for more extensive rehad projects.
Need 100% financing for your rural home? The USDA Rural Development loanmay be your best choice. With low rates and NO monthly mortgage insurance, it is great for those living outside heavy urban areas. It is available in both southern Porter and Lake Counties in Indiana. Check our site for a map to see if your home will qualify.