FHA loans in Rochester, Michigan are an extremely popular way for people to get into a new home. Gem Home Loans offers not only FHA loans, but other types of home loans as well. We will let you know if an FHA loan is right for you, or if you would be better off going another route. Here’s a quick look at the basics of the FHA program, and other information to help you decide if this will be the right choice for you.

FHA Loans 101

FHA Loans Rochester, MichiganAn FHA (Federal Housing Administration) loan is backed by the U.S. Government. The requirements and regulations that determine qualification for this type of loan are set by the FHA as well as the Department of Housing and Urban Development, better known as HUD. If you’re a first-time homebuyer, or you haven’t been able to save enough to put down a large down payment on a home, an FHA loan may be perfect for you.

There are several types of FHA home loans. Here are just a few.

  • HECM (Home Equity Conversion Mortgage) – You’ve probably seen an ad on television for a reverse mortgage program. This is what an HECM is – it allows people 62 years of age or older to turn the equity in their home into cash. It also lets them keep their title. You can either take the money as a line of credit, get a monthly amount of money, or combine the two.
  • 203(k) Home Improvement Loan – This loan makes if possible for people to not only get money to purchase a home, but also to make improvements to the home.
  • Energy Efficient Mortgage – The Energy Efficient Mortgage program is somewhat similar to the 203 (k) loan. However, it’s geared toward making upgrades to the home that will lower energy bills each month. This could include installing a solar energy system, for example.
  • Section 245(a) Loan – If you expect that your income will eventually increase, a 245(a) loan might be worth considering. At first, your payments will be lower. They’ll gradually increase as time goes by.

Should You Consider a FHA Mortgage Loan?

There are a lot of advantages to going for a FHA loan. For example, you should consider this option if your credit isn’t quite where you want it to be, or you don’t have the funds available for a down payment. You can put as little as 3.5 percent down, and your credit doesn’t have to be as good as it needs to be for other types of loans.

In order to qualify for the 3.5 percent down payment, you must have at least two credit accounts. This could be a credit card account or an automotive loan. Also, your credit score must be no lower than 580. If yours is between 500-579, then your down payment requirement will likely be 10 percent.

FHA loans do come with some drawbacks, however. The property you’re trying to buy needs to meet some specific standards. That means you might have a hard time getting a loan if the house needs a lot of work. There is, however, a possibility that you could still buy a fixer-upper through the 203(k) program.

Contact Gem Home Loans to Learn More

As you can see, there are a lot of factors that go into determining whether FHA loans in Rochester, Michigan are the best route. Talk to a Gem Home Loans expert and we’ll help you make the right decision. Contact us online or call (248) 780-1030.