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Why FHA Home Loans Are Great for First Time Home Buyers

[ 1 ] October 1, 2010 |
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First time home buyers are often faced with lots of information and decisions.  Where to live, what type of home, how big of a home, new versus old are all things that can take considerable time to decide.  One choice that is easy is the type of loan to use for the first home purchase:  the FHA loan.  Here are some of the reasons why the FHA loan works so well.

  1. Very low down payment – Unlike a conventional mortgage, the FHA loan only requires a 3.5% down payment.  For many people this can mean a savings amount into the thousands of dollars.
  2. Down payment can be a gift – FHA will allow home buyers to receive their down payment in the form of a qualified gift.  For many college graduates looking to take advantage of home ownership the gift clause can lift a huge burden
  3. Lower private mortgage insurance – Anytime a person borrows more than 80% of the value of the home they must pay private mortgage insurance.  This insurance protects the lender in the event the loan is not repaid.  For FHA loans the mortgage insurance, as a percentage, is much lower that other types of loans.  This means a lower payment at the same interest rate.
  4. Competitive interest rates – FHA loans usually offer rates that are almost as low as  conventional mortgage rates.  This translates into borrowers getting a great loan at a great rate.
  5. Substantial loan limits – The FHA maximum loan limit for the Madison, Wisconsin area is over $290,000.  While this amount does not reflect a mansion, it is certainly enough for most first time buyers to find a comfortable home in a good area.

With low down payments, competitive rates and a possible loan amount of $290,000 the FHA loan is a great way for many people to become homeowners.

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Category: FHA Loans

About Inlanta Staff:

Welcome to our mortgage blog. As a mortgage bank we can provide loans using our own funds or we can use the loans and guidelines provided by one of our many lenders. Our wide array of lender relationships provides our customers with the best loan programs currently available today, whether it is conventional lending, FHA purchase loans, or VA loans.

 

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  1. I am a broker|owner and active Realtor in the area and I can assure anyone reading this that $290K will go a very long way in the Madison WI real estate market!