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How Difficult Is It To Qualify For An FHA Home Loan?

By Jim Micheals

An FHA loan is a federally assisted mortgage loan that is insured by the Federal Housing Administration.

An FHA loan is great for first time home buyers because under the agreement the Federal Housing Administration (FHA) guarantee that the lender will not have to write off a loan. If the purchaser cannot pay off the loan or default on the loan the FHA will pay off the loan.

Qualifications

It is not very difficult to qualify for an FHA loan. The interested home buyer needs to have decent credit, it doesn’t have to be perfect but it has to be fair. There also has to be a good debt to income ratio. The income should be approximately twice what the monthly mortgage payment will be. The lender wants to make sure that the purchaser will be able to afford the monthly mortgage payments. A purchaser can have a previously charged off bankruptcy or a foreclosure on their records and still be eligible for a FHA loan as long as they have improved their credit to a decent level 2-3 years prior to applying for the FHA loan.

The FHA loan allows the first time home buyer to purchase a home with as little as 3% down and there is no prepayment penalty with this type of loan. This type of loan is good for small mortgages. The only downside to this type of loan is that it is not good for people that want to purchase large homes with a large mortgage. This type of loan also requires that the purchaser pay an insurance premium of 1.5% and that a monthly fee is added on to the regular monthly payments.

Conclusion

An FHA loan is accessible to everyone especially first time home buyers who want to purchase a moderate priced home, and even with not so great credit a loan can be obtained.

Related posts:

1. How Do I Get the Best First Time Buyer Mortgage Interest Rate?
2. What Credit Score Do I Need To Qualify For An FHA Home Mortgage Loan?
3. Can I Get A Mortgage Loan With No Down Payment?
4. Do I Qualify For An Interest Rate Reduction Refinancing Loan?
5. What Is PMI For A Conventional Home Mortgage Loan?