As a homebuyer in or around Miami, there are a number of different types of mortgages you can choose from, one of which is an FHA loan. This type of mortgage is insured by the Federal Housing Administration.
Why should you consider an FHA mortgage? Following are a few key reasons.
FHA Loan Tips in Miami, FL
- Your credit score or DTI ratio could use some work. If your credit score or debt-to-income (DTI) ratio disqualify you from applying successfully for a competitive conventional mortgage or another type of loan, you still may qualify for an FHA loan in Miami. Even if your credit score is as low as 580, you might be able to get an FHA loan, even though such a low score might prohibit you from qualifying for a conventional home loan. There is also more leeway if your DTI ratio exceeds the ceiling for conventional mortgages. Your DTI ratio could be as high as 57%, and you would still potentially qualify. The restriction is set at around 43% for a conventional mortgage. While many first-time homebuyers have issues with their DTI ratio or credit score, repeat homebuyers can find themselves in the same predicament. An FHA mortgage is a suitable solution in either situation.
- You cannot afford a higher down payment.
- Maybe you qualify for a conventional mortgage, but you would need to put down 20% to purchase a home. If you cannot afford to put down 20%, an FHA mortgage may be the answer you are seeking. Say your credit score is 620. While you could get a conventional loan with that credit score, you might have to put a high down payment on a home. But that score would also qualify you for an FHA mortgage with just 3.5% down. Indeed, if you have a credit score of 580, you will still qualify for a 3.5% down FHA loan even though you would not qualify for a conventional loan at all.
- You want to keep interest rates low. Just as a high down payment may be required if you qualify for a conventional mortgage with your existing credit score and DTI ratio, higher interest rates may be charged as well. But with an FHA mortgage, you might qualify for significantly lower interest rates even with the same DTI ratio and credit score.
- Reduce closing costs with an FHA loan. The seller is permitted to cover up to 6% of the closing costs if you purchase a home with an FHA mortgage. In some cases, this might even eliminate your closings costs, as they will typically range between 2% to 5% of the purchase price.
- Refinance from a hard money loan. Another reason to consider an FHA mortgage is if you have already purchased a home, but you took out a hard money loan to do so for credit-related reasons. Hard money loans often carry high interest rates. By refinancing, you can significantly reduce your interest rate with an FHA mortgage.
We Are Your FHA Loan Miami Experts
Whether you are trying to purchase or refinance a home in Miami or anywhere in the state of Florida, Lending Bankers Mortgage can connect you with an affordable FHA mortgage. To apply for an FHA loan in Miami now, please give us a call at (786) 220-1100.