FHA Loans for Phoenix Homebuyers

Published on: July 27th, 2021 | Written by Jimmy Vercellino

Has your family discovered the Phoenix home of your dreams but are afraid you will not qualify? My agents from The Highly-Motivated Vercellino Team have counseled hundreds of families who quickly dismiss buying a house. They look at their less-than-perfect credit score and money available for a down payment, and assume purchasing a home is not right for them.

However, I want to tell you that my team partners alongside your family wherever you find yourselves in your financial journey. The Arizona FHA Loan option is specifically designed for couples to believe in homeownership again. Your current credit score and down payment capital are not barriers for my team to help you live in the home of your dreams.

Phoenix FHA Loans Explained

For those who are unfamiliar with them, FHA Home Loans are home financing options used to purchase, refinance, or repair a home. Your chosen lender will provide the actual money for the loan, but the Federal Housing Administration), a government agency, will lay out guidelines such as FHA loan limits. Their job is to protect the lender by preventing borrowers from hitting default.

They are known for having low credit scores and down payment requirements, making them more accessible to more families. However, you will still have to pay private mortgage insurance and monthly mortgage payments every month to protect your chosen lender. Overall, FHA mortgages are a great home loan option for first-time homebuyers in Phoenix that my team recommends to spouses.

Advantages for FHA Loans in Arizona

FHA Home Loans have several benefits that make them stand out from other home loans on the market. These selling points are why I personally recommend these home financing options, depending on your current money situation.

Low 3.5% Down Payment

Unlike Jumbo Loans, which require at least 25% down, and Construction-To-Permanent Loans that ask for 5%, FHA frees you from expensive upfront costs. The Federal Housing Administration only asks for a small 3.5 % down payment at the start of the loan. This cost is very affordable for most families and helps those looking to purchase their first homes.

Down Payment as a Gift

FHA Home Loans are flexible options that allow for your down payment to be a gift. If you have close friends or family that want to be generous, they are able to offer you mortgage gifts. These must be reported to your trusted lender so they have an accurate record of your current finances.

Can Obtain 500 Credit Score

While the average conventional mortgage loan requires 620 or above to secure, FHA loans are more understanding of difficult financial situations.  FHA loans require credit scores as low as 500 for more deserving families to get homeownership. However, the lower your credit score is, the tradeoff is a higher down payment as set by FHA guidelines.

Seller-Covered Closing Costs

Excellent home loan options such as the FHA can help you offset the variety of initial costs by letting sellers pay up to 6% of the closing cost. These additional fees are not often considered by excited borrowers and surprise them when they have to pay thousands extra. FHA Home Loans step above the traditional conventional loans in this way, which only budge at 3%.

No Prepayment Fees

Most loan programs love to take advantage of new homebuyers by penalizing them for paying ahead on their house. Since they had less-than-perfect finances at the start, these loans do not allow for borrowers to come back on top. In contrast, FHA Home Loans encourage couples who have done better in their finances to pay ahead so they can rest easy in their dream home.

Phoenix FHA Loans vs. Conventional Loans

Another common home loan option you will see available on the market is the conventional loan. It is often pitched alongside FHA Home Loans as potential paths to take toward homeownership. However, after comparing the two together, conventional loans are too expensive and inflexible for families without flawless finances.

First, credit score requirements are far higher than the 500 FHA minimum, sitting at a 620 home loan market average. And for your family to get the maximum loan amount for that house you’re dying to move into, you will need an even more impressive credit score than that. We recommend more than 700 to be safe, which is not realistic for all couples buying their first homes.

Down payments for conventional loans, also, are just as insensitive to families that simply do not have the huge chunk of change at the start. On the surface, conventional loans have less of a down payment rule than FHA loans, only asking for 3% of the home’s value. However, when you look at how that benefit is exclusive to families with a credit score tied neatly together, it is not an advantage at all.

Phoenix FHA Loan Assistance Program

The FHA Home Loan choice may be affordable on its own, but some situations require more financial support than others. My Highly-Motivated Vercellino Team understands that sometimes for you to purchase your dream home, you may need extra help. FHA Loan Assistance Programs such as the Home in 5 Advantage Program is made specifically for Phoenix and Maricopa County homebuyers.

This program comes as a miracle for many families by paying up to 5% of the down payment/closing costs rather than asking them to cover it all on their own. Since the FHA Home Loan at the beginning requires 3.5%, this FHA Loan Assistance Program can take the burden off your shoulders.

Your family must have a combined income of less than $105,291 (moderate-income) and a DTI of less than 50% to be eligible. Other debts such as student loans are taken into consideration when calculating the Debt-To-Income Ratio, so keep that in mind as you check to see if you qualify for an FHA.

This payment assistance program, just like the FHA Home Loan, has your best interests in mind by not disguising itself as a second mortgage. It gives the leeway to refinance your FHA loan in the future and keep up with the best loan amounts and interest rates. Excited homebuyers interested in benefiting from this program must have a FICO score of 640 or more.

Let Me Advise You on Home Loans Today!

Nobody more than your family deserves to own a gorgeous, brand-new Phoenix home. That is why I do what I do every day: to provide the custom-tailored mortgage solution that meets your financing needs. My Highly-Motivated Vercellino Team is a group of trusted advisers that partners with you every step of this exciting home buying adventure!

We would be honored to answer your call or email to tell you more about FHA Home Loans in Phoenix and whether they might be right for you. Our team can also address any other questions related to Phoenix home loan options you may have. The number to reach our Arizona office is 480.800.8387 or you can submit a message on our online contact form.

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