Homebuyers in Tennessee have several mortgage choices when it comes to financing their home. One of the most popular in TN remains FHA loans. The FHA mortgage came into being with the objective of increasing ownership by providing homeowners with a cheaper and more convenient alternative to most traditional mortgage loans and by simplifying the purchasing process.
FHA provides a great home financing choice especially for buyers in Nashville and Memphis where home prices can be higher compared to the rest of the state.
Here are just some of the benefits of choosing an FHA loan:
- Low down payment – The main advantage of the Texas FHA loan is the low down payment. The down payment for FHA loans starts at 3.5%, which works out to be a very cost-effective option for first-time homeowners. The especially true considering most conventional loans require 5-10% down payment. The loan is also very flexible because the down payment can come in the form of a gift from family.
- High loan limits – FHA offers loan limits that are high enough to accommodate most homebuyers. Please look up your county loan limit here.
- No hidden charges – FHA loans, like all government-backed mortgages, are a very transparent option for homeowners. Unlike subprime home loans which led to numerous issues in the year past, the FHA loan does not have any hidden charges, excess fees or sudden spikes in interest rate. Interest rates for FHA loans remain some of the lowest available today.
- No saving reserves needed – At the time of closing, most traditional mortgage loans require the applicant to show that they have adequate cash reserves on hand. This usually is a deterrent for most middle-class homeowners, as they are required to show thousands of dollars in addition to the money that is required for closing costs and down payments. However, the FHA loan has no such requirement.
- Credit flexibility – FHA permits lower credit scores when compared to standard conventional loans. Some borrowers can get approved with credit scores as low as 580.
- More borrowing potential – The FHA loan is very liberal as it provides the applicant with greater flexibility in regard to debt-to-income ratios. Using this benefit to your advantage, you can spend nearly half your income on all your monthly obligations.
- Readily available – FHA is a very popular financing solution and is readily available nationwide. The program is not exclusive to just first-time homebuyers, any approved buyer can obtain an FHA loan.
- Approved properties – nearly all single-family homes, townhomes, and many condos are eligible for FHA financing.
Homebuyers in more rural locations in TN should also learn about the 100% USDA Mortgage. Borrowers can learn more about any of the programs listed by calling the number above or just submit the Info Request Form on this page.