FHA Loans Arizona: How Does It Work?

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FHA Loans Arizona: How Does It Work?

Are you among the first-time homebuyers looking for the best options to get affordable mortgages to finance your dream home? Are you afraid that you won’t have enough cash for a down payment to help you start your home buying process? Fortunately, an FHA loan is a viable option for you. Unlike a conventional mortgage, you have the opportunity to take out a home mortgage despite having modest savings or lower credit scores. Moreover, Arizona FHA loan limits can allow borrowers to select from a higher range of home options. You also have down payment assistance available to quickly take out FHA loans if you qualify.

 

Aside from the information on FHA loans, we also share topics ranging from how Arizona home mortgage rates and how Arizona VA home loans work. Especially if you are a veteran or active military personnel, you can find our articles to learn about VA loan rates and make the most of it.

What Is An FHA Loan?

Simply put, an FHA loan is a type of loan that has FHA mortgage insurance or is insured by the FHA for better understanding. If you qualify, your down payment could be as low as 3.5% of the purchase price with a FICO score of 580.

 

FHA loans are not limited to purchasing a brand new home. You can use an FHA home loan to refinance a single-family house. You can even use your FHA home loan to finance two- to four-unit multifamily homes or any dwelling type. To qualify for an FHA loan, you need to be eligible for specific requirements.

 

Qualifying for an FHA loan isn’t as steep as qualifying for a conventional loan. Aside from allowing borrowers with lower credit scores, FHA rules will enable you to take down payment assistance from sources such as your family, charitable organizations, or your employer. However, it would help to inquire about inclusions in closing costs that don’t exist in conventional loans.

What are the FHA Loan Limits in Arizona?

As of April 1, 2022, the FHA Loan Limits in Arizona are $548,250 for a single-family home. The FHA loan limit for a four-plex unit, which is the highest, is $809,150.

What Are The Types of FHA Loans?

An FHA loan is available for you to purchase a finished house. You can also avail yourself of a variety of loan options. Here are the most common types of FHA loan that is available in Arizona today:

 

203(k) Rehab Mortgage:

If you seek funds for your renovation amounting to more than $5,000, this FHA loan type is available. However, the repairs must take less than six months to complete with the help of a licensed contractor.

 

Mortgage 203(b):

A Mortgage 203(b) is a loan package available for refinancing a primary residence for people who seek a low minimum down payment. However, if the property requires more than $5,000 in repairs, you won’t qualify for this loan type.

 

Title 1 Property Improvement Loan:

If you need to supplement your 203(k) loan without refinancing, you can take out a Title 1 Property Improvement loan to address home improvements.

 

Construction Loan:

Though this kind of loan is more complicated to take out, this loan type is available if you have land in mind with a general contractor available to build the home you specifically require.

 

Energy Saving Mortgage:

Are you seeking to install solar panels for your home? You may consider taking out an energy-efficient mortgage.

Mortgage Insurance

FHA mortgage insurance takes up a lot of money if you don’t consider planning how to manage this. For instance, you will need to make an upfront insurance payment once the loan is originated. You may roll this amount into the total amount of the plan, then manage the insurance payments by including this in your monthly payments.

How Can You Qualify for an FHA Loan?

Valor Mortgage has helped clients get the best deals possible out of their FHA loans regardless of their loan scenario. Qualifying for an FHA loan is where we can help you. If you are a homeowner who seeks the benefits of an FHA loan, here below are the qualification requirements:

Credit Scores

The credit score requirements to take out an FHA loan are lower than taking out a conventional mortgage. The minimum reported from some lenders is between 500 and 579. However, please expect to pay a higher down payment if you have a credit score at these levels. Many lenders, though, have stricter credit score requirements nowadays because of the current economic conditions related to COVID-19. You may expect some lenders to ask for a credit score of at least 620 for applicants.

Debt-to-Income Ratio

The current FHA DTI requirement is less than 50%. If your total monthly payment does not exceed half of your pretax income, then you qualify for this specific requirement.

Available Down Payment Funds

If you do not have enough cash available, you may apply for a down payment assistance program, especially for first-time homebuyers. Getting down payment assistance will come in handy if your credit score is 580 or lower because the down payment amount can reach up to 10% of the purchase amount. You may search for grants or low to no-interest loans to finance your down payment.

Property Approval

The qualifications for taking out an FHA mortgage are if your property satisfies FHA rules. There are types of homes that you can purchase using your FHA mortgage. In that case, you may need to seek the help of a separate appraiser to ensure that the home you want to buy satisfies the basic safety and livability standards set forth by the Federal Housing Administration.

Takeaways: We Can Help You Make The Most of Your FHA Loans

We believe that our clients should have the best options available when looking to buy a brand new home or refinance their current mortgage. With decades of experience in the property market, Valor Mortgage can help you navigate through the process to take out different kinds of Arizona FHA loans. We can ensure that you can help you qualify based on the criteria set by mortgage lenders or FHA lenders. If you want a helpful tool to be a perfect mortgage calculator that fits the types of loans you qualify for, then visit this link: Contact Valor Mortgage | Home Refinance | Valor Mortgage Lending (valormortgageaz.com).

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