Is an FHA Loan right for you?

Many first time home buyers hear the promise of the Federal Housing Authority (FHA) of low down payments and lower credit score requirements and want to hear more. FHA loans require only 3.75% down as opposed to 20% down for conventional loan. Currently, a credit score requirement of 640 doesn't provide much relief there, but 3.75% down payment sounds enticing. In addition to your down payment, you will need to pay a premium MI, Mortgage Insurance, in closing costs, as well as the monthly MI payment. FHA inspections can also be intensive, above and beyond what a normal home inspection requires. If you are looking into a Townhome or Condo, the complex must also be approved for FHA loans. Before agreeing to the extra MI and inspection process, know that there is another source in Georgia for down payment assistance called Georgia Dream.

Georgia Dream, provided by the Georgia Department of Community Affairs, will provide $5,000 - $7,500 in down payment for those who qualify based on income and credit worthiness. You must use an approved lender. The standard down payment amount is $5,000, $7,500 for Protectors, Educators and Nurses. Georgia Dream provides assistance to those who are first time home buyers, or those who have not owned a home as a primary residence in the last three years OR those who purchase a home in certain areas. Additionally, homebuyers must 1) not have more than $20k in liquid assets or 20% of the home value, 2) and not make more in household income than stated on the gadream site, 3) meet the lenders credit requirements.

You can find a participating lender to see if you pre-qualify at gadream.com.