Mortgages insured by the Federal Housing Administration need a smaller down payment, have lower closing costs, and can allow for a lower-income and credit score. Due to this lenient requirement, homebuyers prefer to opt for an FHA loan than conventional home loans.
However, before you opt for an FHA-approved lender and apply for this loan, you need to know your home affordability. This is when you need to use an FHA loan calculator Texas. Based on some inputs, an online FHA loan calculator will let you know how much home you can afford. But this is not all. You can use this online tool for comparing several scenarios. Here, we have listed down a few for you –
- How long can one stay in this home?
Irrespective of whether it is a starter home or a home where you live forever, you need to determine whether you should choose a 30-year fixed rate FHA loan or not. Generally, with a longer-term loan, you can lower your monthly payment. However, you will pay a lot more interest over the long term. A 15-year fixed-rate FHA mortgage will slash the total interest. However, your monthly payment will be higher.
- Are you trying to buy too much house?
The FHA mortgage calculator assist you to check your home-buying budget. As it is considering your all-in monthly payment costs, along with FHA mortgage insurance premiums, you will have more confidence that you are looking for the right house at the right price based on your income.
- Will an adjustable-rate mortgage be a good choice?
An adjustable-rate mortgage can be a good loan solution for homebuyers who are planning to stay in a home only for a few years. For instance, a 5/1 FHA ARM will give you a lower initial interest rate, which is fixed for five years. And after those 5 years, it changes annually.
- How large of a down payment should I need to make?
It is an important question, especially when you apply for an FHA loan. Although your FHA down payment can be as low as 3.5%, making a down payment of 10% or more than that means your mortgage insurance premiums will end after 11 years. The higher the down payment amount, the lower the mortgage rate you can ensure. When you put less than a 10% down payment, you will be stuck with those premiums for the life of the FHA loan. And you will have to refinance into a conventional loan to cancel the insurance.
So, check the above-mentioned scenarios when using an FHA home loan calculator and then apply for the loan. And if you face any problem, take assistance from the lender. The lender will help you so that you can fulfill your dream of homeownership.
