If you have a bad credit history, a FHA mortgage might be the way to go for your home loan and get a low fixed interest rate. Every year FHA helps thousands of
first-time home buyers just like you move into the house of their dreams. A home is an investment, it can save you money and it's a place to live and raise children. The FHA wants all Americans
to have an opportunity to enjoy the benefits of owning a home.
Buying a home is not nearly as hard as you might think. FHA is aware that many first-time home buyers may have had some financial problems in the past and don't have a lot of money saved. That
doesn't mean you can't buy a home. Because FHA insures your mortgage, lenders are more willing to give loans with lower qualifying requirements, making it easier for you to qualify (or get
approval). Even if you have had credit problems such as bankruptcy, it is easier for you to qualify for an FHA loan than a conventional loan. FHA has a low 3% down payment requirement, and that
money can come from a family member, employer or charitable organization. Many other conventional loans will not allow this.
Here are a few key facts about FHA loans:
Maximum loan amount: By law, FHA cannot insure loans that exceed certain amounts based on the metropolitan area or county in which you live. The highest maximum FHA
mortgage right now is $362,790. The lowest maximum amount is $200,160. To see what the limit is in the place where you want to live, go to the FHA Maximum Mortgage Limits. This site lists U.S.
territories as states.
Maximum financing: Depending on the state where the property is located, the maximum FHA financing will be either 98.75% or 97.75% of the appraised value of the home
or its selling price, whichever is lower.
Cash required: FHA requires that the homebuyer invest at least 3% of the sales price in cash for the down payment and closing costs. If the sales price is $100,000 for
example, the home buyer must invest at least $3,000. However, the home buyer can use gifts from family, funds from local, state or government agencies, or other sources for the down payment.
Non-FHA loans may not allow this.
To qualify for an FHA Mortgage you must have a valid Social Security Number, be a legal resident of the United States and be of legal age to sign a mortgage in your state. You must also meet
the FHA's basic eligibility requirements. This is where your income, your credit history and your savings are evaluated.
Your lender will decide if you qualify for a mortgage based on the "Four 4 C's of Credit" which are your credit history, capacity to repay, cash to close and collateral. Your credit history
involves what you've borrowed in the past, and how well you've paid it back. Capacity refers to your income and your ability to handle the monthly housing payments. Cash to close refers to
money for the down payment and closing costs. Collateral refers to the home you're buying. There is one other thing that is important to remember: A lender cannot reject your loan application
based on a lack of credit history or your decision not to use credit. If you do not have an established credit history, or if you do not use traditional credit, the lender must develop a credit
history from utility payment records, rental payments, automobile insurance payments or other direct reports from credit providers.
To find out more on FHA loans, use the search below to find and contact a real estate professional or a free or low cost HUD approved housing counseling agency to help you evaluate your loan
potential. A real estate professional or a housing counseling agency will know what kinds of mortgages lenders are offering and local down payment help and can help you choose a lender with a
program that might be right for you.
Find out the Benefits Of A Bad Credit FHA Mortgage Loan
Find out the FHA Home Loans Available With Bad Credit
Find out the FHA Hope For Homeowners In Foreclosure Or Default Program