FHA loans are obtained through Federal Housing Administration (FHA) qualified lenders who in turn are guaranteed by the FHA. Several programs are available to increase home ownership through FHA loans. Down payments can be hard to save, especially in this economy, but an FHA loan may only require 3.5 percent down to purchase a home.
Can Anyone Qualify for an FHA Home Loan? There are no income limitations when it comes to FHA loans. This makes it somewhat easier to obtain an FHA loan than standard mortgage loans. Your credit score also does not need to be perfect to be accepted for an FHA home loan. When being considered for FHA home loans, a reasonable debt to income ratio is important in determining the overall amount of the loan.
Are There Any Downsides to FHA Home Loans? While your credit score doesn’t have to be perfect, it should be good or at least fair. Those with poor credit might not qualify for an FHA home loan. The other downside to FHA home loans is that the amount most people become qualified for is much lower than other mortgage loan amounts.
What is so Great about FHA Home Loans? What’s special about FHA home loans is the fact that they look at a potential borrowers overall package. They look at their income, credit and down payment amount before deciding whether or not to accept or reject the application.
FHA loans usually finance what will be the borrower’s primary residence. This can include townhouses, row houses, condos, detached and semi-detached houses. However, the loan program does not usually allow loans for rental properties or investments.
Just because a person has a low credit score doesn’t necessarily mean they will be disqualified for an FHA home loan. It usually depends on how the credit score became low.
Delinquent accounts and late payments are an example of what activities may disqualify a potential borrower from an FHA home loan. Those who simply do not have credit may still be considered.
An FHA lender will look at payment history records in order to determine if the potential borrower qualifies. Previous bankruptcy, short sales or foreclosures will not necessarily disqualify a borrower from an FHA loan. If it has been three years or more since the negative event and the borrower can prove their finances are better, they can still be considered for an FHA home loan.
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