Best Features of Colorado FHA Loans for first time homebuyers

Two of the key challenges that face first time homebuyers is raising a down payment amount and having a poor credit history. Many first time homebuyers have many financial needs that may not let them start saving for down payment. By reason of being first time homebuyers, many people have not had time to put in order their FICO scores. In spite of these challenges, the dream of many people is to access a mortgage that they can use to buy their homes. There are various programs that have been set up to address the challenges that many first time homebuyers face in accessing credit. One of the programs backed by the government to assist people with poor scores and low down payment is Colorado FHA loans. The FHA program is designed to support first time homebuyers with low scores and poor credit history to buy home. The FHA home loans in Colorado have various features that make them suitable for people with poor scores and imperfect credit history. These are as follows:

• FICO scores-many mortgage programs are very strict as regard FICO score requirements. Some have set their minimum scores too high to be attained by first time homebuyers. For instance, to qualify for a conventional loan, you must have a minimum score of 640. However, when applying for Colorado FHA programs, you need a minimum score of 500. In case you want to put a low amount down of 3.5% of the total loan amount, you need to attain a minimum of 580 FICO scores. The good news with this mortgage is that you can still apply for it even if you don’t have FICO scores. The lender will apply other information sources of your credit to reconstruct your score.

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• Low down payment-This is one of the best features that make this mortgage the best option for first time homebuyers. Many first time homebuyers may not have enough amounts to put down when applying for a conventional mortgage. This is because the minimum amount that you put down when applying for a conventional mortgage is 20% of the total loan you’re borrowing. However, when you apply for FHA home loans in Colorado, you’re only required to put down 3.5% of the total loan amount.

• Blemished credit history-If your credit history is tarnished because of bankruptcy or foreclosure situation, you’ll still be eligible for Colorado FHA loans provided that you meet simple conditions. As compared to conventional loans, the waiting period to rectify your credit is two to three years depending on the situation which caused the imperfection. For example, if you have encountered a bankruptcy situation, you wait for two years to elapse before you apply for the mortgage.