Many major lenders offer both FHA home loans and conventional mortgage loans. If you are like many people, you may find it difficult to choose between these two options simply because you are unaware of the additional benefits that FHA loans have to offer. Below you can learn more about some of these benefits so that you can better understand why choosing an FHA home loan is often the better option when compared to conventional mortgage loans.
Benefit #1: FHA Home Loans Offer An Easier To Meet Credit Score Requirement
Both FHA home loans and conventional mortgage loans will have a credit score requirement that must be met for you to qualify. However, the credit score requirement associated with FHA home loans is lower and therefore easier for more people to fulfill. This is especially true for first-time home buyers and individuals who have experienced credit problems in the past. If your credit score is currently on the lower end, you may find that you can qualify for an FHA home loan even if you have been turned down for a conventional mortgage loan.
Benefit #2: FHA Home Loans Require A Smaller Down Payment
If saving up enough money for a down payment has been an obstacle for you on your journey to home ownership, an FHA home loan could be the tool you need to help you overcome this obstacle. This is because while FHA home loans do still require you to put down some money upfront, these loans typically require a much smaller percentage of the overall purchase price as a down payment. This can also prove quite beneficial for individuals who plan to make immediate repairs or upgrades to their new home since a smaller down payment will leave them with more available funds that can be used to complete these projects.
Benefit #3: FHA Home Loans Allow Gift Contributions From A Wider Range Of Sources
Conventional mortgage loans often come with very restrictive rules regarding gift contributions. While these rules can vary some from one lender to the next, conventional mortgages often restrict gift contributions to spouses and immediate family members. This can be a serious problem for people who want to take advantage of assistance programs that offer help with down payment and closing costs. If you are planning to participate in this type of assistance program, you will definitely benefit from the more relaxed gift contribution rules associated with FHA home loans.