So, you are all set to buy your dream home in Texas. However, one of the major issues that many people face is financing the entire expenditure. It is not feasible to finance the entire amount on your own. This is the reason why many of us opt for home loans.

The presence of a large number of loan options can be quite confusing for home buyers. Choosing the right home mortgage loan can be a difficult task, especially if you are a first time home buyer in Texas. This is where home mortgage lenders in the state can help you out. A reputed mortgage company can provide you complete information on the required credit score and out-of-pocket expenses to incur and the income requirements in order to qualify for a specific home loan. They can also help you in selecting the most suitable mortgage option that will meet your specifications and budget.

FHA vs. Conventional loans
Thanks to the subprime loan fallout, most mortgage lenders have become stringent about their credit requirements. While opting for a conventional loan is quite common among most home buyers, qualifying for the same can be a tough task. In order to qualify for a conventional loan, the borrower must meet a higher credit score requirement. The higher the credit score, the lower the interest rates. Apart from this, conventional loans can be quite costly due to the down payments, origination fees and mortgage insurance.

However, in case you don't have the required credit score, or the finances to bear the out-of-pocket expenses, will you give up the idea of buying your dream home? Well, you don't need to! The Federal Housing Administration (FHA) home loans programs are here for your rescue. FHA loans provide a gateway towards home ownership for people who don't have the required credit score and financing to qualify for a conventional loan.

Understanding FHA loans
The Federal Housing Administration is part of the Department of Housing and Urban Development. It does not lend money, but provides government backing in case the borrower defaults in repaying the loan. Unlike the conventional loans, the FHA lenders don't follow strict underwriting rules.

This type of loan allows people with low income and low credit scores to turn their dream of buying a home into reality. It also requires a lower down payment (3.5%) as compared to conventional home loans. The disadvantage of a low down payment is that you may end up paying more interest than you would pay for a conventional loan. The mortgage insurance premium for FHA loans is also higher than conventional loans. The credit score requirement is quite lenient for FHA loans. Borrowers need to have a minimum credit score of 600 to qualify for an FHA loan.

FHA loans are one the easiest mortgage option that first time home buyers have. However, whether it is the best option or not depends on your situation. Consult your home loan expert to determine the best loan option.