Flexible Ways to Use the FHA Loan
Posted On March 26, 2020
The FHA Loan is a popular home loan for first-time home buyers because of its low down payment options and more lenient credit score and debt-to-income ratio requirements. In 2018, approximately 83% of FHA borrowers were first-time home buyers. When using an FHA Loan, you have to use it on a home that will pass the FHA appraisal. In a busy market, it may be hard to find the right home to pass the FHA appraisal.
If you’re trying to use an FHA Loan but you’re struggling to find the right home, there are some flexible ways to use the loan.
If you haven’t found a single-family home or townhome that is FHA-approved, you may be able to find an FHA-approved condo. In some cases, you will find a condo in an FHA-approved condo project, in other cases an individual condo may qualify. A condo can be a great option for first-time home buyers because it will typically have a lower price, and thus a lower down payment. Maintenance will be provided by the condo management company. Most condo communities have amenities like a pool or a gym. Your condo can also be an investment opportunity, if you choose to move one day you can also use it as a rental property. However, before you rent your condo, you’ll need to check on the rental restrictions within your condo community.
If you’re struggling to find a move-in ready home that will pass an FHA appraisal and within your budget, you might want to consider expanding your search to a home in need of repair or renovation. The FHA 203(k) loan is designed specifically for fixer uppers so you can finance the cost of the home and the cost of the needed renovation into one convenient mortgage. Before you choose to buy a fixer upper, make sure you’re prepared to take on the renovation project. You may not be able to live in the home right away, so you’ll need to make other arrangements to stay in your current home before you move in.
Expand Your Search
If you’re not finding the right home in your desired neighborhood, you may have to look elsewhere. A slightly longer commute could be the difference between buying a home and continuing to rent. Working with a Realtor or real estate agent will help you find homes, often before they are listed publicly on search sites like Zillow. Make your list of “needs,” “wants,” and “nice to have” and prioritize accordingly. Your perfect home may be nearby and you haven’t noticed it yet.
Many first-time home buyers choose the FHA Loan because of its low down payment options and more lenient credit score and debt-to-income ratio requirements. However, no first-time home buyers are alike and there are numerous other loan programs that might work better for you. If you’re buying your home or just starting to do your research, let us know. We can work together to find the right home loan for your first home.