As a newcomer to the world of home buying in the state of Texas, it’s important to do research on loans and mortgages. Maybe you’re fed up with making rent payments or maybe you’re newly married and ready join the ranks of being a home owner. Put simply, you know you don’t have a lot of money and homes that need some repairs or updating are the only homes in your price range. This situation may seem less than ideal, but is one that many people are finding themselves in. Fear not, this is the age of do-it-yourself. Did you know you can actually receive assistance to help you buy a house needing repairs or updates? The Federal Housing Administration, a sector of the United States Department of Housing and Urban Development, provides FHA purchase loans for different types of home seekers. Texas FHA loans are becoming more widespread today.
The most popular FHA purchase loans are the 203(b) loans, which allow you to purchase a house and fix it up, with all of the costs of repair included in the loan amount, or to simply refinance a house. This is a benefit for first time home-buyers, especially ones who are young or simply do not have the funds to spend on a hefty down payment. An added benefit to buying a fixer-upper is that you can make changes to the house that you actually enjoy.
A common misconception is that the FHA is giving you the loan money. This is not true. Think of it more as mortgage insurance. The loan is still being funded through a participating lender, such as your bank, a loan association, or a mortgage company. The purpose of the FHA is to guarantee to purchase the mortgage should the home owner go into default or foreclosure. This reduces the risk to loan lenders because they will still get paid for the mortgage and it also helps protect you as the home owner.
Here’s how the 203(b) loans work. They may be used to buy an existing house or refinance a new house. It needs to be a one-to-four unit family home and can be located anywhere, whether urban or rural. You must intend to use the potential property as your primary residence, even if it is not a single-family home. So, if it is a duplex, triplex, or fourplex, then you are required to occupy one of the units.
There is no necessary income requirement in order to be eligible for these FHA purchase loans. In some states, a credit check may be required for certain purposes, but will not be the sole indicator of whether or not you will receive the loan. Instead,...