Though there are various home financing options in the USA, the FHA home financing is the most sought after. Being a government assisted agency, it was mainly set up to help people buy homes during the Great Depression and has continued to support people who are unable to afford the down payment by the conventional sources of home loans. There are many benefits when applying for a FHA home loan. The primary being that you can qualify easily. In addition, FHA does not give the money directly to the buyer but has an agreement with the bank that helps protect the banks interests as well as the buyers. However, the funding does not depend on taxpayer’s money but comes directly from the insurance premiums of existing FHA customers. This ensures that it is an independent body and is not dependent on any other source of income to run.
FHA home loans also do not require a great credit history and this make it easier for people who are looking to buy a house but cannot approach banks due to the credit defaulting history. The low down payment option is also a great pull for the FHA home financing agency. The conventional down payment is 20% of the total loan however; the FHA home finance requires only 3.5%. Also in some cases, there are further reductions in the down payments in certain states. In addition, there is the option of no down payment and the whole amount is financed. This helps many people buy their own homes while also not getting into something they cannot afford and have trouble paying up.
The reason for the low interest rates is due to the insurance that the federal government gives the banks. It also helps to have a FHA home loan as it prevents foreclosure in case the market crashes. You can also use the FHA loan as many times as you want but you must not have more than one home loan at that time has a loan to value that is more than 75%. However when buying a house make sure you are within the FHA home loan limit to avail the loan. Though they do not require credit scores to give a loan, they will check your accounts to make sure that you are able to afford to make regular payments. This process has made the United States the best-housed country in the world.