A FHA loan is an attractive option, especially for first-time homeowners:
- Generally will accept lower scores than Conventional.
- Allow more of a seller assist,(towards the closing costs) 6% instead of 3%.
- Requires a down payment 3.5% instead of 3%.
- Property has tougher than conventional loan appraisal qualifications.
- Mortgage Insurance (charged by the lenders for not having 20% down payment) is a higher monthly premium.
FHA does offer the re-hab loan. Sometimes knows as 203-K and also Homestyle loan. This is used for the person that finds a home in their ideal location but the home needs some repair work.This loan can take the existing home down to ¼ of the original basement & then the buyer can re-build the rest to his specific requirements making the home exactly what he wants.