FHA loans are available to people who need a little extra support in their home lending process. These aren't even really "loans" per se, because the Federal Housing Administration simply provides insurance to the loans from lenders so that they can give mortgages to people who need them. Put simply, the government insures loans to help lenders reduce their risk of loss with borrowers who are a higher credit risk.
People who are eligible for FHA loans include those who:
- Have fair or bad credit
- Have a small down payment
- Have been through foreclosure
- Have been through bankruptcy
This program has been around for almost a century and it has been helping the elderly, lower-income families, military members, and others who need a little assistance. The benefit is that this is the easiest type of mortgage loan that you can qualify for. The difficult part is that you must qualify for it in the first place.
Key tips for when you want to get an FHA loan:
- Applicants must provide two years of steady employment history, social security number, and a minimum credit score of 500. If your score is lower than 580, you will typically require 10% down instead of the standard 3.5%.
- You must be two years out from your bankruptcy and three years from your foreclosure and have fair to good credit. This means you didn't go right back out and ruin it again.
- Properties must be appraised by FHA-approved services to determine value and if the sale price is right.
- You can't have more than 43% of your income make up your debts.
Advice on finding the best FHA loans:
Getting FHA loans is something that a lot of people can turn to when they don't have other options for lending. You should check out this option for yourself and see what kind of loans you can find if you qualify. Be sure to visit the FHA website (www.fha.gov) to learn more and talk to your own lenders about their FHA-insured status and whether they can help you get a cheaper loan. It's all about getting more for your money and these affordable, easy loans are good for anyone who qualifies to get them.
If you have been thinking about FHA loans but you weren't sure whether they fit your needs, you can now rest assured that they do offer something. Take the time to apply for these loans and see how affordable you can get a home loan with this group on your side.
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