Since 1934, FHA has been helping consumers to become homeowners with low cost and effective solutions. FHA (The Federal Housing Administration), which is a part of HUD (Housing and Urban Development), insures the mortgage so that lenders can offer better deals at the least possible cost. For this reason, FHA mortgages work well for first time home buyers.

First time home buyers will find that FHA is consumer friendly and offers all borrowers a chance at homeownership provided the borrower meets FHA’s qualifications. Borrowers must meet the regular FHA credit qualifications which are more lenient than other mortgage types. Depending on the credit score, a borrower may be eligible to receive 96.5% financing with an FHA mortgage. While FHA charges an upfront mortgage insurance premium, this fee can be financed into the mortgage under certain conditions. For many borrowers, purchasing a single family residence is too expensive and is not an option. With FHA mortgages, eligible properties can be from one to four unit structures which will allow borrowers to receive rental income which will help pay the mortgage. FHA mortgage loan limits vary depending on the area, but these loan limits are also higher depending on the number of units. In some cases, many first time home buyers are interested in purchasing a lower priced home that requires renovations. This is possible with an FHA rehab mortgage which provides the funds necessary for the improvements to be performed.

First time home buyers will find that many states offer down payment assistance in the form of a grant or low cost loan. Often, a first time home buyer is someone who has not owned a home within the most recent three years. These programs go well with FHA mortgages and, in many instances, reduces the amount of cash a borrower needs to purchase the home. Along with this, FHA also offers home counseling which provides borrowers the information that they need for budgeting when purchasing a home. Counseling can help borrowers understand how much they can afford, as well as, setting up a financial plan that will last. Information received from counseling can also help borrowers improve their credit scores while, at the same time, give them the knowledge they need to reduce their debt.

FHA has many perks available for first time home buyers that will aid and encourage them with their home purchase. While assisting borrowers with FHA mortgages, FHA also attempts to educate first time home buyers of the process and long term benefits of homeownership.

FreeRateUpdate.com surveys more than two dozen wholesale and direct lenders’ rate sheets to determine the most accurate mortgage rates available to well qualified consumers at a standard .07 to 1% point origination fee.