If you’re currently considering the idea of getting a new construction loan in Corpus Christi for the home or building that you need to construct, you’d be glad to know that you have various options at hand.
For one, you may apply for a first time home buyer loan, a general mortgage loan, or a low credit loan. There are lending organizations in Corpus Christi and other nearby Texas that offer all these loan options to private individuals, construction companies, and other parties. However, not everyone can avail of these loans for reasons such as low credit score rating.
If you happen to have a low credit score or have insufficient money for a down payment, an FHA loan may be the best option for you. But before you rush out to apply for one, you should first know about these things related to FHA loans:
Those with a low credit score may qualify
Other loan types require the borrower to have a high credit score to qualify, but with an FHA loan, it’s not the case.
You only need a credit score of at least 500 to secure an FHA loan and prepare only a 10% down payment. A credit score of 580 or higher, meanwhile, could qualify with a lower down payment of 3.5%, which is a pretty good deal.
Your property options may be limited
The Federal Housing Administration (FHA) which facilitates and approves the loan enforces stringent guidelines on the types of properties that loan applicants may purchase.
For one, your preferred home must first be inspected by a HUD-accredited appraiser before being given the green light. This means that compared with other types of loans, your field of options is fairly limited, so you should do your research to find the best property possible.
Also, do note that the FHA will only approve your loan application if they accredit your chosen lender, so it’s another thing that you must keep in mind.
You can buy a multi-unit property
One strong point for an FHA loan is that you’re not limited to buying just a single-family property but a condominium unit or a multi-unit residence property. So, in theory, you can qualify for the loan and purchase a property that has four or five units included. However, do note that you must live in one of the units and not treat the property as a mere investment or rental facility.
It’s possible to have other parties fund your down payment
Yep. You’ve read that just right.
An FHA loan’s down payment may be funded by your friends or even by the seller (up to 6% of the total loan price to your closing costs). Theoretically, you could cover the entire amount of the required down payment without taking a single penny out of your pocket. Pretty neat, we should admit.
You must be employed within the last two years
A critical parameter of qualifying for an FHA loan is that you should have a verifiable history of employment within the past two years. By verifiable, this means that you must present proofs such as bank statement, pay stub, and federal tax return documents.
This is the FHA’s way of ensuring that you have the financial capacity to pay up your loan and to protect the lender from instances of loan defaulting.
Just be guided by these things, and you should have a hassle-free FHA loan application.