Home ownership has long been the American dream and there are many tangible benefits, which include stability in housing costs and building home equity. But with the rise of home prices and interest rates, a growing number of people are finding themselves priced out of their local markets.

In situations like today, traditional products, including the 30-year fixed mortgage, may not be the best fit. That’s why prospective homebuyers should explore all options, which include Federal Housing Administration and affordable home loans. Homebuyers may not necessarily think first of these loans, but qualifying borrowers may benefit from features that are not widely available with other options. Mortgage loans are subject to credit approval — so being creditworthy makes it more likely that your loan will be approved.

Federal Housing Administration (FHA) Loans

FHA loans are issued by private lenders and insured by the Federal Housing Administration. For homebuyers with limited savings and less-than-stellar credit, FHA loans can be a lifeline.

Compared with typical conventional loans, FHA loans require a smaller down payment — as low as 3.5 percent — and accept lower credit scores. Although borrowers with less than a 20 percent down payment need to pay monthly mortgage insurance premiums, this can be outweighed by the benefits, which were increased this year by the government.

This year, the government raised FHA loan limits — the maximum amount you can borrow —ranging from $472,030 in rural areas to $1,089,300 in higher-cost housing markets.

Additionally, mortgage insurance premiums have decreased. In February, the Department of Housing and Urban Development lowered required mortgage insurance premiums from 0.85 percent to 0.55 percent. According to government sources, for new borrowers with an FHA-backed mortgage, this creates an average annual savings of $800.

Affordable Home Loans

If you meet low- to moderate-income standards specific to your area or if you’re trying to close on a home in a specific geographical area, you might be able to qualify for an affordable home mortgage loan. These loans typically have highly competitive features to help ease the financial burden for borrowers, such as a low requirement for a down payment, closing cost assistance and a competitive interest rate. Some lenders, including Zions Bank, have home loans that cover the cost of mortgage insurance for qualifying borrowers. These advantages can mean home prices previously considered unaffordable are now within reach.

These loans were developed to help spur economic growth in designated census tracts, which are typically underserved areas with potential for future expansion. Historically, many census tracts in Idaho have naturally grown and attracted new residents and businesses. Idaho has been consistently ranked among the 10 fastest growing states for the last few years and it’s likely that population growth will support development of these designated areas.

Homeownership includes financial and social benefits

The sooner you can purchase a home, the sooner you can start reaping the rewards of homeownership — which include building equity and locking in monthly housing payments for the length of a fixed-rate mortgage. And if interest rates trend back down in the future, you can apply to refinance at a lower rate, often using the same affordable product used to purchase the home.

Aside from the financial benefits, becoming a homeowner can positively impact you on an emotional and social level. Your home helps provide more freedom over your living space and helps you become more invested in your local community.

If homeownership is part of your American dream, now is the time to act. Being proactive and focusing on the things in your control can help you successfully navigate Idaho’s housing market.