Did you know there are different kinds of FHA loans in Troy, Michigan? If you didn’t, you need to speak with a Gem Home Loans expert. We’ll detail all of your options, and let you know the pros and cons of each. You might not even find that an FHA loan will do the best job of meeting your needs. If that’s the case, we’ll help you decide on a loan option that will protect the financial health of both you and your family for years to come.

What You Need to Know About FHA Loans

FHA Loans Troy, MichiganBacked by the Federal Housing Administration, FHA loans provide lenders with a sort of security blanket. If a borrower should default, the FHA will pay the lender up to a certain amount. This makes banks and other lending institutions more likely to approve this kind of loan. People who can’t come up with a big down payment, or maybe have credit issues, can often get FHA loans when they couldn’t get conventional loans.

There are actually several types of loans that fall under the FHA umbrella. They include the following.

  • Home improvement loans – If you’re only planning to renovate your home, and you’re not planning to move, you might qualify for a 203 (k) home improvement loan.
  • Home equity conversion mortgage loan (HECM) – This is more commonly referred to as a reverse mortgage loan, the kind you’ve no doubt seen advertised on television. In a nutshell, an HECM is for people 62 and older. It gives them two options – they can either get cash each month, or turn the money into a credit line. HECM loans are a way to convert the equity in your home into cash, while being able to keep your title.
  • Energy efficiency loans – This is kind of similar to the home improvement loan. It’s designed to encourage making energy-efficient improvements, such as installing solar panels or purchasing appliances that can reduce your energy bills.
  • Graduated loans – The FHA also offers a 245(a) loan. This might be worth considering if you believe your income will eventually go up. You’ll have lower payments at the start of the loan, and then, as time goes by, those payments will gradually get higher.

Is an FHA Loan the Right Choice?

As you can see, you have a lot of options when it comes to pursing an FHA loan. There are other benefits as well. You may, for instance, be able to put down only 3.5 percent instead of the 20 percent that’s typically required with other loan programs. You don’t even have to come up with that 3.5 percent on your own. It can be gifted to you from a member of your family, a friend, or even a charitable organization.

However, you’ll have to have a credit score of at least 580 to qualify for the lower down payment. If your score is 579 or below, you’ll have to come up with a 10 percent down payment in most instances. Also, you might have difficulty qualifying for an FHA loan if the home you want to buy isn’t structurally sound, or doesn’t mean certain health and safety standards.

Get in touch with Gem Home Loans for more information on FHA loans in Troy, Michigan. You can use our online contact form or give us a call at (248) 780-1030.