How to Qualify For a FHA Home Loan
How to Qualify For a FHA Home Loan - Current home owners needing to refinance and first time home buyers can qualify for a FHA home loan quite easily if certain requirements are met. Although FHA generally looks at the overall credit profile and not just credit score there are still some basic requirements a borrower has to meet. One of the most important is the mortgage has to have been paid on time for the last 12 months.
FHA loans also allow for a non-occupant co-borrower to help you qualify for a loan. You can qualify using the co-signer's income if your income is hard to document.
Borrowers who do not qualify for FHA mortgages financing may be qualified for other programs which offer similar benefits to FHA loan programs. For more information, contact a financing advisor at 414-303-1215 or via email at firstname.lastname@example.org
FHA loans can qualify a borrower with little or no credit history as well by using alternative credit. This can be done by supplying 4 types of monthly bills paid on time for one year. Examples of alternative credit include: rental history, electric bill, cable bill, cell phone bill, or any other type of account that is paid monthly.
To qualify for a FHA home loan, the property must pass certain FHA inspections.
FHA or Conventional - What is the difference between an FHA loan and a Convetional loan? This is a question many homeowners ask. Many first-time homebuyers obtain FHA financing due to down payment limitations. With an FHA loan you will pay an upfront mortgage insurance premium and you will pay a monthly PMI (private mortgage insurance). With a conventional loan you will also have PMI if you dont put down at least 20%, however, there are many mortgage programs available that you will be able to avoid paying PMI. FHA loans are INSURED by the Federal Housing Administration. A conventional loan is not insured or guaranteed by any government agency. Your mortgage professional should be able to direct you towards the right loan for you.
Conventional loans are becoming more and more accessible for people with limited or no down payment. Conventional lenders have been coming out with a lot more programs that appeal to this market. Both loan types can provide borrowers with benefits though and your mortgage broker should be able to decide which one is best for your situation.
Conventional loans can be more appealing to sellers, because there is more "red tape" associated with an FHA loan.
Conventional mortgages will also have more options as you have the opportunity to do a stated income mortgage, no doc mortgages or various other types of programs that you might need.
Many sellers stipulate that they will not accept FHA financing from a buyer, on their property, due to the requirements of FHA in regards to appraisals and the "picking" at very minor items that need to be fixed or corrected first before the FHA lender will lend on the loan. Also, FHA loans take considerably longer to close (start to finish), on average, that Conventional loans.
Low lending limits currently make FHA loans impractical for many higher priced markets such as coastal counties in California and east coast suburban neighborhoods.
While FHA loans are good for some borrowers in certain situations, conventional loans simply have many more options. In addition to offering no income loan, no doc. loans, stated income and such loans, conventional also offers the increasingly popular home loan programs such as interst only loans, Pay Option ARM loans and 40 year amortization loan that FHA does not.
Recent FHA Changes - Recent changes have been made in the process of obtaining an FHA loan. An FHA appraisal is no longer needed, but the Appraiser must be a certified FHA Appraiser.
Most people have heard "horror" stories about getting an FHA loan or have had bad experiences themselves. The changes that have been made make it much easier for the subject property to be eligible for FHA lending. Most items that need to be repaired can be listed as general wear and tear or cosmetic by the appraiser.
One new FHA change that may take place soon is the elimination of down payment assistance programs. Be sure to contact us about the currently available options.
Federal Housing Administration (FHA) - Federal Housing Administration (FHA) - An agency of the U.S. Department of Housing and Urban Development (HUD). They mainly insure residential mortgage loans made by private lenders. They also set the standards for construction and underwriting but do not plan or construct housing nor lend money.
The Federal Housing Authority insures loans mainly intended for first time home buyers. However, you need not be a first time buyer to qualify for an FHA loan. Some of the key benefits of FHA financing are relaxed credit scoring criteria, low downpayment options, and allowances made for gifts to be used for downpayment funds.