FHA Loans
Kansas
Kansas continues to respond to some challenges for LGBTQ+ equality. However, some cities offer those of all lifestyles access to equal opportunity and living. Kansas City, Kansas, for example, received a perfect score from the Human Rights Campaign (HRC). The Delano District in Wichita is also making strides toward more inclusiveness.
Despite pushes to reduce diversity initiatives, many in Kansas are fighting back against these restrictions, recognizing the value of a multicultural and inclusive society. These advancements make purchasing a property in Kansas tantalizing for those who seek affordable housing, lovely weather, and quiet living.
If you’re dreaming of home ownership in Kansas, an FHA loan is worth considering. High down payments and low credit scores are some of the biggest barriers to purchasing a home today. FHA home loans overcome these common challenges and make buying your next home an easier process.
Contact Pride Lending today to learn more about how an FHA mortgage can help you buy your next home.
What Are FHA Loans?
Since its development in 1934, the Federal Housing Administration (FHA) has played a critical role in encouraging homeownership amongst marginalized groups. For example, a quarter of a million Black borrowers have become first-time homeowners over the past three years thanks to the program. The Department of Housing and Urban Development has explicitly stated that supporting underserved communities is one of its primary goals in the coming years, only building on its commitment to those who might be sidelined by the mortgage industry.
This includes LGBTQ+ people, who have benefited from HUD’s non-discrimination policies since 2012. In 2021, this commitment was reaffirmed in an executive order that directs HUD’s Office of Fair Housing and Equal Opportunity to thoroughly investigate any instances of discrimination in housing access for LGBTQ+ individuals.
These strong protections for marginalized individuals are paired with excellent mortgage benefits, making an attractive option for potential buyers.
A Federal Housing Administration loan helps make homeownership in Kansas more accessible through lower down payments and better interest rates. Because of the less stringent eligibility criteria, FHA home loans are popular among first-time homebuyers and are also a great financing option for those with less-than-perfect credit scores.
The FHA loan program is able to offer people better rates and loan terms than conventional loans because it’s backed by the government. While FHA loans themselves come from private lenders, the loans are regulated and insured by the Federal Housing Administration, a branch of the United States Department of Housing and Urban Development.
Benefits of Federal Housing Administration Loans in Kansas
Using an FHA loan to finance your Kansas home offers many benefits, including the following.
Small Down Payment Options
Almost every home loan type (except USDA loans and VA loans) requires some money down. FHA loans have lower down payment requirements than conventional home loans, usually around 3.5% for those with a score of 580 or higher or 10% down for those with scores less than 580.
If you’re interested in buying a home in Kansas but don’t have enough saved up to cover the initial costs, you may still qualify for a loan. Kansas has many assistance programs available, including the Kansas Down Payment Assistance Program or the Kansas Housing Resources Corporation First Time Homebuyer Program.
We can also help you find national programs that meet your needs, including those specially made for certain groups of homebuyers.
Additionally, FHA loans allow gifted funds to be applied to your upfront costs. This means you can accept gifted funds from family and friends if you supply a gift letter explaining that this is not a second loan.
Competitive Interest Rates
If you are interested in an FHA loan in Texas, then you should understand the benefits of this option. Here are a few advantages Texas homebuyers will experience with FHA loans.
Flexible Underwriting Guidelines
Underwriting is the process of evaluating a borrower’s risk. Since these borrowers are in more precarious financial situations, most applications are underwritten manually. What loan officers look for during the underwriting process is usually more flexible with FHA loans, whereas a conventional product would have more strict requirements.
Assumable Mortgages (Buyer Can Take over Existing FHA Loan)
An FHA mortgage on a house in Texas may be eligible as an assumable mortgage for a new buyer. Essentially, instead of taking out a new loan to buy a house, you take over the debt and payments for an existing FHA mortgage and become the new owner of the house. This is an excellent option for people with spotty credit reports.
FHA Loan Requirements
Every lender will have their own requirements for the FHA program. However, the typical Texas FHA loan requirements are as follows.
Minimum Credit Score
To qualify for an FHA home loan, you should aim for a credit score of 580 or better, as they will allow you to access the best rates and lowest upfront expenses. Lenders approving FHA mortgages may allow for scores as low as 500 if they offer at least 10% upfront.
Down Payment Amount
As mentioned previously, the minimum down payment for an FHA mortgage is 3.5% for those with a score of 580 or greater; those with scores between 500 and 579 must make a minimum payment of 10%. Although this is a low down payment and makes homes more affordable, it also means you would pay a private mortgage insurance premium (MIP).
We understand that even 3.5% can feel like a challenge depending on your personal finances, but Pride Lending is here to assist. We’ll connect you with local, state, and nationwide down payment assistance programs that can provide you with grants or second liens.
Numerous organizations in Texas offer assistance for those who can’t afford their upfront costs. For example, you may choose DPA programs from the Texas State Affordable Housing Corporation (TSAHC) or the Texas Homebuyer Program from the Texas Department of Housing and Community Affairs.
Debt-To-Income Ratio (DTI)
DTI compares your monthly debt payments to your gross monthly income. You divide your debt total by the gross income each month and then multiply by 100 to get a percentage. The typical lender will require a maximum DTI of 43%. Lenders can make an exception to a maximum DTI of 57% if the borrower has a good credit profile and provides a larger down payment.
Property Standards
Since the government is backing this mortgage, approval for the property type is needed before the loan is given. An appraisal will ensure the property is safe to occupy and up to standards for liveable conditions.
Additionally, this home must become your primary residence to qualify. However, it is possible to purchase a property with up to 4 units and rent up to 3 units, as long as one is used as your permanent residence.
Mortgage Insurance Premiums (MIP)
Everyone, no matter how much they put down, needs to pay the upfront mortgage insurance premium, which is 1.75% of the loan amount. You’ll also have to pay ongoing annual mortgage insurance premiums, though this may not be for the entire length of the loan.
If you make a 10% down payment or more, the MIP will be removed after 11 years, but if you make less than this, you’ll have MIP for the entirety of the loan. It’s also possible to refinance into a conventional loan once you have 20% equity, which would remove mortgage insurance.
Kansas FHA Loan Limits
FHA sets loan limits, which are the maximum purchase price they will finance. Loan limits vary depending on current rates and the specific county within Kansas. FHA loan limits reflect the housing market, so that you can expect higher limits on cities with higher prices.
FHA loan limits in Kansas range between $498,257 and $958,350. Currently, all single-family homes in Kansas have an FHA loan limit of $498,257. Maximum loan limits are higher for multi-, tri-, and quad properties. Loan limits also change yearly based on market trends. You can check the current loan limits for the Kansas county in which you’re planning to buy by using the HUD tool.
The FHA Loan Process
Ready to apply for an FHA loan for your dream home in Kansas? Complete the FHA loan process with the following steps:
See if you meet the requirements
Evaluate if you have a credit score of 580 or greater, a DTI of 43% or lower, and that you meet the down payment requirement of 3.5%. You may still qualify if you have a score as low as 500 or a DTI of 57%, but this may limit your choices.
Contact Pride Lending
When you reach out to us, we’ll begin your loan consultation by reviewing your options with you. FHA-approved lenders are qualified to give out these mortgages, and finding the right loan partner is the key to a positive homebuying experience.
Apply and get pre-approved
Pre-approval will prepare you for a smoother buying experience and help you understand what you can afford. You will need many documents for your application, including tax returns, paychecks, and bank statements.
Shop for the perfect home
Once you’ve been preapproved, we’ll discuss your budget with you and send your preapproval letter to your realtor. You can then begin shopping for the right property in your area.
Submit an offer
You and your realtor will decide on a competitive bid and submit the letter to the seller.
Complete the application
The application is called the Uniform Residential Loan Application and will include many of the same details you needed for preapproval; however, it will also include property details, which the lender will use to determine whether the property meets their standards.
Offer acceptance
The seller will decide if they find your offer acceptable. If they do, then you’ll sign a purchase contract that tentatively agrees to buying the home.
Inspection
While not strictly necessary for the program, the lender will likely require you to have the property inspected, ensuring that there are no significant issues.
Conditions
If you’re happy with the inspection results, then our team at Pride Lending will walk you through the sales contract and make sure everything is correct.
Underwriting
We will submit all the details that you have provided to the lender, whose underwriting team will now take over. They will carefully investigate each facet of the loan and ensure that there are no issues with you or the home.
Appraisal
An approved appraiser will evaluate the property to determine if it is a fair value, is safe to live in, and meets the property requirements for FHA home loans.
Loan approval
Once the appraisal is complete and the details of the loan have been reviewed, the lender will proceed with the final approval of your loan so that you can close on the transaction. We will schedule the closing date with you and the title company will send the information regarding how to pay the upfront expenses.
Close on the home
All the documents will be signed, the title will be transferred to you, the closing costs will be paid, and you will become the new owner of that house with the help of an FHA home loan.
Why Choose Pride Lending for Your Texas FHA Loan?
When you need the right team on your side to navigate the Texas FHA program, a loan officer from Pride Lending is ready to help. We serve all our clients with the same care, offering excellent customer service and a streamlined application process to make homeownership affordable and accessible.
Our team is composed of allies and members of minority communities, including LGBTQ+ and BIPOC individuals. We’re here to help everyone, no matter their identity, and serve as an advocate for those who may feel underserved by the mortgage industry.
First-time homebuyers and repeat buyers alike can work with Pride Lending whether they want to buy a single-family home or learn about an FHA reverse mortgage. Call us today at 725-231-0192 to learn more about Texas FHA loans.