The Benefits Of An FHA Home Loan For Buyers In Helena, MT

by | Mar 9, 2018 | Business

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Buying a home in Helena, MT, is a goal for people of all ages. It can be a challenge to come up with a large down payment, to have a top credit score and to have the ability to make mortgage payments.

One option that is ideal for individuals or families with less than top credit and with limited cash for a down payment is the FHA home loan program. This is a government-backed mortgage that is insured by the Federal Housing Administration. This insurance backing means that lenders have less risk should the buyer default, so they are able to offer lower down payments. They can also provide the loan to people with lower credit scores than required for conventional (non-government insured) loans.

Fixed-rate Interest

With the FHA home loan, there are two options for the loan term, the 15 years and the 30 years. Both of these loans have fixed-rate interest, which means the interest rate never changes, making loan payments predictable throughout the life of the loan. It is possible to pay more on the loan voluntarily to shorter the term, but there is no requirement.

Credit Score and Down Payment Required

For a conventional home loan in Helena, MT, applicants will need a credit score of at least 620 to qualify. They will also need to put down between 5% and 20% depending on the amount of the purchase and other factors.

With an FHA home loan, approval is possible with credit scores of 500. The down payment for those with credit scores about 580 is just 3.5%. For those 500-580, there is a requirement of a 10% down payment.

In addition, with the FHA loan, borrowers will have a premium fee of 1.75% and an annual premium through the life of the loan that will range between 0.45% and 0.85%. This will be factored into the monthly mortgage payment.

An FHA loan is only available through an approved lender. Take the time to compare different approved lenders and find the best interest rates on the loan for your home purchase.

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