Could you get an FHA 15-year or 30-year mortgage to buy a home in Los Angeles? According to the Department of Housing and Urban Development (HUD), as of 2021, 10.85% of home purchase loans nationwide were FHA loans. And about 4.83% of home refinancing loans in 2021 were FHA loans.
The number of people using FHA loans to buy or refinance a home is going up: during the third quarter of 2022, 12.45% of home purchase loans were FHA loans, along with 12.17% of refinances.
Pros and Cons Of Different FHA Loan Terms
FHA loans can be offered to borrowers with lower credit scores and come in 15-year and 30-year terms. Both 30-year and 15-year FHA loans can provide up to $1,089,300 for a single-family home and up to $2,095,200 for a 4-unit property. So, then what may you ask are the pros and cons of 15-year FHA home loans and 30-year FHA home mortgages?
FHA 15-Year Mortgage Advantages
Borrowers who take out 15-year mortgages pay less interest over the term of their loan than borrowers with longer loan terms. One option for some buyers is to take out a 30-year mortgage and then refinance into a 15-year mortgage to reduce interest costs and increase the amount of equity they have in their home.
FHA 15-Year mortgages are available and can be a good option for buyers who want to pay their mortgage off in half the time of a traditional, 30-year mortgage term.
FHA 30-Year Mortgage Advantages
FHA loans are available for borrowers with lower credit scores or a short credit history. They also have more lenient debt-to-income (DTI) ratios than conventional home mortgages. An FHA home loan can help some borrowers buy a property they otherwise couldn’t afford due to the lack of a high down payment or a DTI ratio that doesn’t meet conventional mortgage criteria. Because Los Angeles County has increased home prices, FHA loans are available for over $1 million.
Downsides of FHA Loans
FHA loans can come with higher closing costs than conventional loans. They also require mortgage insurance premiums (MIP). FHA loans also require appraisals that ensure the property meets government standards to qualify for the loan.
Contact the experts at California Platinum Loans today and learn whether an FHA loan is right for you or whether you will benefit more from a traditional conventional loan or a non-qualified mortgage loan as a self-employed entrepreneur or business owner.