Federal Housing Administration (FHA) loans are loans that are distributed by a private lender like HMS Capital, which the FHA insures. In other words, the government guarantees that they will cover your loan if you cannot pay it. FHA loans aren’t right for everyone, but they offer another option for home buyers that is flexible and forgiving. With an exceptionally high approval rate for applicants, FHA loans are a great option for many first-time home buyers.

FHA loans are a good alternative for other real estate opportunities, and they have contributed to the explosion of the housing market in recent years. As a kind of incentive for homebuyers, FHA loans are one of the more flexible loan options available. There are specific benefits of FHA loans, and they work a little differently than other types of loans. If you would like to know more about an FHA loan option, contact us at HMS Capital. Here’s a little more information on how an FHA loan works:

Low Down Payment

Here at HMS Capital we’re familiar with the common obstacles that often stand in the way of buyers purchasing homes. One of the most prevalent issues in buying a home is the pressure buyers feel to offer a large down payment in order to decrease the monthly mortgage fee. Fortunately, FHA loans provide buyers with the opportunity to qualify for a loan with a low-percentage down payment.

Easier to Qualify

Another advantage of FHA loans is that even with a less-than-desirable credit score, many individuals qualify. Additionally, there is no required income amount to be approved for an FHA loan, as long as it’s clear that you’ll be able to make the monthly payment. Furthermore, the factor of debt-to-income ratio is much more forgiving than other traditional loan options.

How Does It Work?

FHA loans work a little differently than other types of loan options. First, the application and approval process is much less demanding. If the applicant qualifies for the loan, then mortgage insurance is provided by the FHA to cover any potential non-payment scenarios. Usually there is a monthly fee associated with providing this mortgage insurance, which is usually manageable for many individuals. HMS Capital can help you navigate this process and answer any questions you may have about FHA loans.

HMS Capital Inc. a dba of Best Capital Funding NMLS ID: 303222, CA DBO license #01846368, loans made or arranged pursuant to a California Finance Lenders Law license. Colorado NMLS #303222, regulated by the Division for Real Estate; Florida – License #MLD1214, Ohio – License #SM.502062.000; Oregon – License #ML-5410; Pennsylvania – Licensed as a first mortgage banker by the Department of Baking License #51518; Texas – NMLS #303222; Washington – Consumer Loan Company License #CL-303222