There are many mortgage options available for Texas residents hoping to purchase homes for the first time, even if they earn low to moderate incomes or have less than perfect credit scores.
A Federal Housing Administration (FHA) loan is a type of federally backed mortgage that is issued by an approved lender and insured by the FHA. Part of the U.S. Department of Housing and Urban Development, this government agency provides insurance for mortgages owned by private lenders. With this type of loan, borrowers are required to pay a mortgage insurance premium (MIP) each month as collateral. FHA loans are ideal for borrowers who may have lower credit scores, and are often preferred by consumers interested in buying their first homes.
Applicants should have credit scores of at least 580 to qualify for an FHA loan. Down payments can come from grants for down-payment assistance, friends or family members, savings, or other sources of income.
Texas FHA mortgage lending limits can fluctuate based on local housing prices and the type of housing a person wishes to purchase. FHA-approved banks and financial institutions will look over applicants’ qualifications and evaluate their ability to repay the loan. Consumers hoping to get an FHA loan in the state must meet the following requirements:
An FHA Limited 203(k) mortgage can be used to purchase, renovate, repair, or upgrade a property. This type of FHA loan gives homeowners immediate access to cash to put toward improvements and updates or get their homes ready to sell through a single mortgage.
The Section 203(k) program was created by the FHA to improve and repair single-family homes, giving homeowners an accessible way to purchase property and improve their neighborhoods. As a type of FHA loan, many of the same FHA standards apply to a 203(k) mortgage.
A buyer must often follow a lengthy, expensive process when obtaining funding for a home that needs significant repairs or upgrades. These loans typically have high interest rates that must be paid in full within a brief time frame. However, a Section 203(k) loan is a long-term loan with an adjustable or fixed rate that can be used for both the purchase of a home and its renovations. This type of loan also gives lenders some security by allowing them to insure the loan. Certain lenders may require additional fees to be paid by the homeowner or buyer, such as supplemental origination fees and appraisal fees.
A Section 203(k) loan can cover minor repairs that are more than $5,000. It can also fund the repair of a residential part of a structure that is used for non-residential reasons, or the conversion of a dwelling to a one- to four-unit property.
Section 203(k) loans will cover the following:
FHA-backed loans are ideal for Texas homebuyers and homeowners who may have lower credit scores or are unable to make large down payments. These loans can be used to purchase property, pay for repairs, install home upgrades, and more. Still have questions about securing an FHA loan? We can help. one of our dedicated mortgage loan officers today!