Youre planning to purchase your first home.
What a glorious event!
Until it comes time to figure out how youre going to pay for it.
Heres what to know if youre shopping around.
What Is an FHA Loan?
This insurance gives banks, credit unions and other lenders more leniency to approve mortgages outside conventional loan requirements.
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The major advantages of choosing an FHA loan are theeasier credit standardsand the lower down payment minimums.
But there are some drawbacks, too.
Homes must meet strictstructural standards, making most fixer-uppers hard to get approval for.
If youre set on one, look into anFHA 203K loan.
FHA Loan Requirements
Your credit score and down payment arent the only requirements for an FHA loan.
For example, most people choosing an FHA loan choose a 30-year fixed mortgage with 3.5% down payment.
FHA Loan vs. That depends on your financial situation.
Say youre putting down 5% or more on your house.
Thats how youll save the most money in the long run.
So if home ownership is your dream, go on and get that mortgage.
Jen Smith is a staff writer at The Penny Hoarder.
She gives money-saving and debt-payoff tips on Instagram at @savingwithspunk.
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