With a plethora of loan options available in the housing market today, homebuyers have a number of financial support options to choose from.
One of the few loan programs leading over the rest is the Federal Housing Administration (FHA) loan. This loan can be accessed through authorized lenders in most parts of the US, including Colorado.
Imparting various benefits to Colorado homebuyers and home-owners—such as convenient down payment requirements and adequate refinancing options—there is no doubt as to why the FHA loan encompasses approximately 25% of all loan programs in the market.
If you are considering going for the FHA loan in Colorado, make sure to go through its specifics. Detailed information can be accessed through your local HUD office, and here we have a breakdown of the basic aspects of the FHA loan.
Unlike conventional home loans that require borrowers to fulfill a minimum of 5% of the purchase price as down payment, the FHA loan is more accessible. In order to qualify for a Colorado FHA loan, homebuyers are required to pay just 3.5% down payment.
However, know that the down payment percentage will be higher if your credit score does not match the required credit score.
Credit Score Requirement
Most lenders impart some leniency in credit score requirements for the Colorado FHA loan. Where in conventional loans you are require to maintain accredit score of 620 and above, FHA loans require a minimum score of 580.
Be informed that a credit score lower than 500 will increase your minimum down payment requirement to over 10%. FHA loan requirements also take your employment history and debt-to-income ratio in account, with the credit score.
The FHA is a friendly loan option for homebuyers in Colorado, especially those individuals making their first home purchases. Amongst other benefits, borrowers can seek closing contributions as low as 6% of the appraised value of their home.
As a result, homebuyers can limit expenses at the closing table, making this program a convenient option for buyers with strict cash flow observations.
All in all, an FHA loan is a particularly great option for a first-time homebuyer in Colorado who does not have sufficient equity tied to their current property.
If you need assistance in getting a Colorado FHA loan, or would like to be informed of the nuances of this loan program, the experts at e-Finance Mortgage, LLC are here to guide you.
Give us a call at (844) 433-4626. Our loan specialists look forward to discussing your needs and goals to help you acquire the home of your dreams!