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FHA Loans
FHA loans, also known as Federal Housing Administration loans, are government-backed mortgage home loans. They are a part of the US Department of Housing and Urban Development (HUD) and are meant to help make homeownership more accessible for homebuyers who have lower credit scores and/or smaller down payments.
Benefits of an FHA loan:
Lower down payment: Compared to other loan types, FHA loans allow you to put down as little as 3.5% with a credit score higher than 580 (Federal Housing Association). This is a great opportunity for individuals who have limited savings and want to become homeowners.
Can still qualify with a lower credit score: Although a higher credit score is preferred, individuals without a perfect credit history can still qualify for an FHA loan compared to a Conventional or Jumbo loan.
Flexible loan options: FHA loans are available for many different property types such as townhomes, condos, single-family homes and more (HUD).
Some of the qualifications for an FHA loan consist of a minimum credit score of 500 and a debt to income (DTI) ratio of ≤ 43%.
Remember, that these minimum requirements apply to some of our loan options. There are many other alternatives and requirements available as well.
February Mortgage Rates
As of February 29th, we have seen slight fluctuations with little upward and downward trends compared to January 2024. According to Bankrate, we ended this month with an average of 7.18% for a 30 year fixed, 6.70% for a 15 year fixed rate, and 7.70% for a ⅚ adjustable mortgage rate.
Some of the rates on the most popular loan types ticked up the week of February 21st, increasing an average of .02% for a 30 year fixed and .06% for a 15 year fixed mortgage. Although this seems like rates are going in the opposite direction people were hoping, it’s important to remember rates fluctuate every day.
Chief Economist, Lisa Sturtevant gave a detailed prediction saying, “The Federal Reserve has indicated that there will likely be cuts to the short-term federal funds rate in 2024, which will put downward pressure on mortgage rates. Overall, though, rates are expected to remain above 6% throughout [2024].” Rates may still be higher than they were a few years ago, but that doesn’t mean you have to lose hope on becoming a homeowner. We want to emphasize how important it is to meet with several lenders to find a rate that works best for you. Each lender offers varying interest rates and loan options based on your qualifications, giving you the opportunity to secure an affordable home.
What does this mean for you?
Reflecting back on February's mortgage rates, there were minimal fluctuations indicating some stability compared to previous months' sharp increases and decreases. This could be a positive sign for potential buyers who were hesitant during past months. As we are only in the second month of 2024, there is still plenty of time for interest rates to change during your search to finding your new home. It's an ideal moment to keep saving money until we see more downward trends in interest rates, enabling you to make a larger down payment on your home, secure the most suitable loan for your financial requirements, and focus on finding your dream home.
One thing to remember is individual rates will vary. Rates also depend on your credit score, loan amount and more. Make sure to stay on top of mortgage rates so you can get the best deal for your dream home!
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