If you’re planning to purchase real estate for sale in Core San Diego, it’s important to understand the different types of loans available to you. Many potential home buyers are eligible for something called an FHA loan. If you are unfamiliar with this type of loan, this article provides the basic important information you need to know.
The Federal Housing Administration, or FHA, is a government agency. An FHA loan is insured directly by this agency. Since the loan is insured, lenders can offer more incentives to the borrower such as lower interest rates, more flexible qualification requirements, and low down payments and closing costs. Because the requirements are less stringent than conventional loans they are a good option for first-time home buyers.
A huge incentive to using an FHA loan is the low down payment requirement. In most cases, the requirement for an FHA loan is 3.5 percent down. Borrowers can use funds from their own accounts or they can be gifted the down payment amount by a family member. They can also receive the down payment in the form of a grant through an assistance program funded by a state or local government.
For a mortgage to qualify for a down payment of 3.5 percent, the borrower must have a credit score of at least 580. Borrowers with a credit score between 500 and 579 have a down payment requirement of 10 percent or more. Those with credit scores under 500 are usually not eligible for FHA loans.
On all FHA loans, there are two kinds of insurance premiums required. There is an upfront premium paid at the time of loan generation. This amount is 1.75 percent of the loan and can be paid at closing or it can be included in the financing of the loan. The second premium is called the annual premium and is paid as part of your monthly mortgage payment. This premium varies and is based on the loan-to-value ratio as well as the term of the loan.
Whether you opt for an FHA loan or a different type of loan, there are many options for properties if you want to live in the downtown San Diego area. Call 92101 Urban Living at 619-649-0368 today, and we can show you some of the incredible lofts, penthouses, and condos for sale in Core San Diego. ')}