| This article is the second part of a series of | | | | dollars you borrow. This is the fee the lender |
| articles that I have devoted to breaking down | | | | charges you to borrow the money. |
| some of the most common questions I receive | | | | The APR is a value that reflects the actual cost |
| about buying a first home using a FHA mortgage. | | | | of borrowing the money and it includes all of the |
| Here are the next two burning questions I receive | | | | fees that go with purchasing your home. Because |
| from home buyers. | | | | each loan is different, your APR will be different |
| How much do I need for a down payment for | | | | than someone else's. There is no set number |
| my first-home if I qualify for a FHA loan? | | | | because the government uses a special formula |
| Most home loans for purchases require a down | | | | to calculate this number. This number is |
| payment that equals approximately 3.5% of the | | | | determined by taking the amount of money you |
| purchasing price, but some applicants may qualify | | | | are borrowing and adding the closing costs on the |
| for a no down payment FHA loan. Your mortgage | | | | loan and any other fees accumulated to the |
| professional will be able to tell you if you need a | | | | borrowing amount. All of the interest that you will |
| down payment and how it can be paid or | | | | be paying over the length of the loan usually 30 |
| arranged. FHA will allow applicants to use money | | | | years for an FHA loan is added into the figure and |
| that is given to them from a family member or | | | | it is then broken down into the rate, reflected as |
| employer for their down payment. | | | | percentage. |
| What will the annual percentage rate on my loan | | | | Say you borrow $50,000 to pay for the home in |
| be? Is it the same as the interest rate on my | | | | a popular neighborhood. Your closing costs are |
| loan? | | | | $700, and additional fees equal $2,000. Your APR |
| I will answer the second question first. The annual | | | | will be determined how much interest is paid on |
| percentage rate (APR) is not the same as the | | | | $52,700 over 30 years and then broken down |
| interest rate on your loan. The interest rate on | | | | into a percentage. |
| your loan is the percentage you pay per so many | | | | |