What is a Vermont FHA Loan?
A Vermont FHA loan is a type of government-insured mortgage from the state of Vermont. By insuring FHA loans, the Federal Housing Administration (FHA) agrees to compensate lenders if borrowers default. This insurance makes FHA loans more secure for the lender, which allows the lender to offer some benefits to prospective borrowers. One the most crucial benefits of an FHA loan is in how the down payments are structured. First, the down payments are much smaller, usually 3.5%, whereas conventional loans can have down payments as high as 20%. Secondly, the down payments can be made by an outside party, as a gift by a friend or family member, or as a grant from the government. These differences in the down payment are part of what make FHA loans a good fit for many first-time homeowners, who often struggle to save enough for a large down payment. Below, we at Online Loans have broken down the assorted information available across the web into a convenient need-to-know to make getting you FHA loan as simple as possible. Check out our mortgage calculator as well to help get an idea of what your first home will cost you.
To qualify for an FHA loan with 96.5% financing (3.5% down), you must have a credit score of 580 or more. If you have a FICO credit rating that is between 500 and 580 you may qualify for an FHA loan with 90% financing. Exceptions are sometimes made to allow borrowers with credit scores below 500 to get FHA loans, but these are only in circumstances where the borrower has good credit for the past two years. These restrictions are minimum guidelines set by the FHA, but individual lenders will often have higher credit requirements than these minimums. To get an FHA loan, you also must have a mortgage payment expense to income ratio (the percentage of your monthly income that would have to go to your FHA loan payments) of at least 31%. Additionally, you need a total fixed payment to income ratio of no more than 43%, which means no more than 43% of your monthly income can be spent on your combined debt obligations (mortgage, car loan, student loan, etc.). The funds from an FHA loan can only be spent purchasing, improving, or refinancing the borrower’s primary residence.
The interest rates for FHA loans are typically lower than the rates for conventional loans because FHA loans are insured. However, there is a variation between lenders, since each lender sets their own rate. Generally, rates depend largely on your credit rating: the higher your score, the better your rates. For tips on keeping your credit strong, check out our credit rebuilding guide.
FHA loans always have fixed interest rates. A fixed interest remains constant throughout the entirety of the loan despite whatever fluctuation there is in the prime interest rate. Fixed interest rates are more stable for borrowers than variable rates, because the borrower knows how much they will be paying every month. Longer term FHA loans have slightly higher rates because the borrower gets this stability for a longer time. Smaller loans also tend to have higher APRs, because the administrative costs represent a larger percentage of a small loan. For Vermont FHA loans you can expect to see APRs between 4.4% and 5.2%. .
Maximum ($) Limits - By County
FHA loans have maximum limits which are set for each county and each type of housing ins that county. In Vermont, the smallest maximum limit is $294,515 for a one family home in one of the less expensive counties. The largest maximum limit in Vermont is $659,050 for a four family home in Burlington. See the rest here: Download Formats: Excel (.xslx) & CSV