Rhode Island FHA Loans
Plenty of people know enough about home financing to know that the money to purchase a house comes from the bank. However, many people are not aware of what loan products a bank has and that there are many, many different types of home loans. Based upon your lifestyle, one type of loan may be a better option for your situation than another. The Rhode Island FHA loan program, for example, is a great option if you're a first time homebuyer and would like to take advantage of the low prices in the current real estate market but may not have perfect credit or haven't saved enough money for a down payment from traditional loan programs. And since the program is managed by the Federal Housing Administration, you can be sure that the loan you'll receive will be an ethical, responsible product.
FHA Loan Benefits
Rhode Island FHA loans require only 3.5% of the purchase price as a down payment (due at the closing of the loan), while many loan programs require a full 20%, which can save buyers between $30,000 and $50,000 depending on the purchase price of the home. Additionally, where many loan programs require exceptional credit, the Rhode Island FHA loan program works with banks and provides a guaranty for each FHA loan issued to ensure that more buyers qualify. The guaranty gives the bank a little extra assurance that the loan will be paid and allows them to be a bit more lenient when it comes to the actual qualification process. The end result is that even some buyers with previous foreclosures or bankruptcies can apply and be approved for a Rhode Island FHA loan.
Rhode Island FHA Loan Limits
There are maximum loan limits for loans issued against the Rhode Island FHA loan program, so potential borrowers should check with their lender before beginning their house hunting. The Federal Housing Administration works hard to ensure that regardless of where buyers are, they will be able to afford a modest home in their particular area, so the maximum loan limit is adjusted in areas which have a higher cost of living. Since Rhode Island does have a high cost of living, the limit in most areas of the state is $475,000 (as opposed to the 2009 baseline of $271,050 for most areas in the country).