What is an Alabama FHA Loan?
An Alabama FHA loan is a government-sponsored home loan within the state of Alabama. These loans are insured through either the Federal Housing Administration (FHA) or the Department of Housing and urban development (HUD). Government insurance means that if the borrower fails to pay off the loan, the government will reimburse the lender to assist them to lessen their losses. When a loan is insured, it has a lower risk to the lender, so the lender is capable of offering lower prices and lower credit score requirements. A primary advantage of FHA loans is that they have quite small down payment requirements, either 3.5% or 10% relying on your credit score. Additionally, particular among mortgages, the down payment for an FHA loan can be paid for by a member of the family as a present, or by using a government grant. The decreased minimum credit score rating and reduced down payment make FHA loans ideal for borrowers searching to buy their first house, as they are less probably to have a long credit history, and do not have the sale of a previous house to use on the down payment of a new one. In Alabama, FHA loans vary among lenders but have a maximum size based on the county and the kind of housing the loan is being used for. Below, we at Online Loans have broken down the assorted information available throughout the internet into a convenient need-to-know to make getting your FHA loan as easy as possible. For a better idea of whether an FHA loan is your best option, you can calculate the costs using our mortgage calculator.