First-Time Homebuyer Loans: Backstory
Since the FHA loan is common for first-time homebuyers, many people refer it as a “first-time homebuyer loan.”
Coincidentally, someone doesn’t have to be a first-time homebuyer to qualify for an FHA loan. If you’re purchasing a primary residence, you may be eligible for this program even if you own multiple investment homes.
So why is this loan program referred to as a first-time homebuyer loan?
- It has one of the lowest down payment options.
- Credit score. You do not have to have perfect credit. In some cases, these loan programs will let you go down to the low 600s and even high 500s. Not everyone will qualify with a high 500 credit score, but it DOES NOT rule them out in and of itself.
- Debt-to-Income Ratio (DTI). This is what determines how much money can be borrowed compared to income. FHA programs will allow you to borrow more money per dollar of earnings compared to any other loan program, with exception of a VA loan in some cases..
FHA loans are much more flexible and accommodating to get you into a home. That is why so many first-time homebuyers utilize this program more than anything else.
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