FHA loans offer easy qualifying and low down payments on home loans. Guidelines to help you qualify for an FHA mortgage.
Owning a home of your own is the American dream. However, before that dream can be realized you must first take a look at such things as income, job history and credit history. Although a conventional home loan may be difficult for some people to qualify for based on problems with past credit, an FHA loan tends to be a little more forgiving and it among one of the easiest loans to qualify for.
The Federal Housing Administration, or FHA, is a government agency that provides first time home buyers a chance to own a home with little money down or home owners the opportunity to refinance existing mortgages up to 96.5 of the homes value. Since FHA is ran by a government agency there are several different types of loan programs offered (some with no money down). Ask your loan officer is you qualify for any special FHA programs.
Do I Qualify for a FHA Home Mortgage?
Before the FHA loan process begins, take a realistic look at your income. Will you be able to afford a mortgage payment? Typically, a FHA loan program prefers that your mortgage payment be 29% of your gross income. However, FHA will extend that up to 35% if your loan officer determines that you can comfortably make that payment, or if that payment is similar to what you are currently paying. Your loan officer will also look at your employment history or money making ability. The FHA requires that you have stable employment for at least 2 years before applying for a home mortgage.
FHA Loans and Credit Problems
An FHA loan is among one of the easiest loans to qualify for, even if you’ve had credit problems in the past. The minimum credit score required by the FHA is 620. If you’ve had the unfortunate experience of a past foreclosure or bankruptcy, you can still qualify. FHA guidelines state that you can qualify for a home mortgage 2 years after a bankruptcy and 3 years after a foreclosure. However, you must show that you’ve rebuilt your credit so that’s it satisfactory to the lending institution.
*Affects pricing. With the No Closing Cost
Option, borrowers finance the closing costs instead of paying for them at
closing. Borrowers who pay closing costs at closing may qualify for a lower
interest rate. Some upfront fees (ex. credit report and appraisal) may apply
and may be credited at closing.
*Refinancing or taking out a home equity loan or line of credit may increase
the total number of monthly payments and the total amount paid when compared to
your current situation.
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