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As a borrower in the market for a mortgage, you may have heard about FHA loans. FHA loans are insured by the Federal Housing Administration, meaning that if you default on your loan, the government will step in to help cover your losses.
This makes FHA loans a popular choice for borrowers who may not have perfect credit or who don’t have enough money saved up for a large down payment.
In this article, we’ll talk about FHA loan qualifications for Texas.
We’ll cover the eligibility requirements and the application process.
What Is an FHA Loan and Who Qualifies for One in Texas?
An FHA loan is a mortgage that is insured by the Federal Housing Administration (FHA). This means that if you default on your mortgage, the FHA will step in and help you pay it back.
This makes FHA loans a popular choice for home buyers who may not qualify for a conventional mortgage.
To Qualify for An FHA Loan in Texas, You Must:
- Be a U.S. citizen or permanent resident
- Have a credit score of at least 580
- Make at least 3.5% down payment on the home purchase
How to Get Pre-Approved for An FHA Loan in Texas
In order to be eligible for an FHA loan in Texas, you must first get pre-approved. This means that the lender will check your credit score and income to determine how much money you can borrow and at what interest rate.
To get pre-approved for an FHA loan, you can contact any of the approved lenders in Texas. You can also use the HUD website to find a list of approved lenders in your area.
Once you have been pre-approved, you will be able to start house hunting!
What Are the Benefits of An FHA Loan in Texas?
There are many benefits of using an FHA loan to buy a home in Texas. Some of these benefits include:
Low down payment requirement: As mentioned earlier, you only need to make a down payment of 3.5% on the home purchase.
Flexible credit requirements: FHA loans are available to borrowers with a wide range of credit scores.
Fixed interest rates: The interest rates on FHA loans are fixed, meaning your monthly payments will stay the same for the life of the loan.
No prepayment penalties: You are free to pay off your loan early without penalty.
What Are the Drawbacks of An FHA Loan in Texas?
While there are many benefits to using an FHA loan in Texas, there are also some drawbacks. Some of these drawbacks include:
Mortgage insurance premiums: You will be required to pay mortgage insurance premiums (MIP) on an FHA loan. These premiums can be quite costly.
Title 1 loans: If you want to make any home improvements, you may have to take out a Title 1 loan. This is a special loan offered by the FHA that allows you to borrow up to $25,000 for home improvements.
How to Apply for An FHA Loan in Texas
If you are ready to apply for an FHA loan in Texas, here is what you need to do:
1. Contact a lender: The first step is to contact a lender and get pre-approved for a loan.
2. Find a home: Once you are pre-approved, you can start house hunting!
3. Submit an application: Once you have found the perfect home, submit an application to the lender.
4. Get approved: The lender will review your application and if everything looks good, they will approve you for a loan.
5. Close on the home: Once you are approved, you will need to close on the home. This process usually takes place within 30 days.
What Happens After You’re Approved for An FHA Loan in Texas?
Once you are approved for an FHA loan in Texas, you will be required to pay mortgage insurance premiums (MIP). These premiums can be quite costly, but fortunately, they are tax deductible.
You will also need to keep your mortgage current and in good standing. This means making all of your monthly payments on time and staying within the loan terms.
If you ever decide to sell your home, you will need to repay the FHA loan in full. This means that you will need to have enough money to pay back the loan plus any fees and interest.
If you are currently in the market for a new home, be sure to check out FHA loans! These mortgages offer many benefits, including low down payment requirements and flexible credit requirements. Contact a lender today to get pre-approved!
