Loans granted by the Federal Housing Authority (FHA) are specially designed to help finance home mortgages. This agency – created by the US Department of Housing and Urban Development (HUD) – states that their service is not available for usage as property investment, but is to be extended to first-time homebuyers. However, you don’t have to be a first time home buyer to qualify for an FHA home loan.
The FHA itself does not provide the funds necessary for acquiring the home by itself, as their job is merely to guarantee the loan instead. This service is ideal for those who’ve been rejected by lenders, as the FHA’s guarantee gives lenders extra confidence when extending loans to applicants.
However, in order to apply for an FHA home loan, applicants are required to comply with several requirements first, which includes a steady employment history. Those interested in obtaining this loan need to have worked at least two years for their current employer, as well as have generated a consistent income over the past couple years.
Their credit reports must also be in good standing showing no late payments within the last twelve months. The document has to show that the report holder hasn’t filed for bankruptcy during the past two years as well. Moreover, records must indicate that the applicant didn’t have a foreclosure over the past three years, and must qualify for mortgage payments including taxes and insurance that are less than thirty-one percent of his or her gross monthly income and total debt should not exceed 43% of their gross monthly income.
Those who qualify for FHA-backed loans are entitled to several benefits, including flexible income requirements, reasonable credit expectations, and a minimum down payment of 3.5%.
Of course, to enjoy these benefits in the first place — let alone fulfill the dream of owning a home for the very first time — interested applicants have to ensure that their credit reports showcase good credit scores and minimal blemishes. If not, using the help of a reputable credit repair company is recommended, as the professional can help you clean up your credit report within the shortest span of time possible.
Our free consultation provides a significant amount of free credit education and can be based on your individual credit report as well.