FHA Home Loans

Buying your first home is exciting. Finding the right mortgage may not be as exciting, but it certainly is as important. Several options are available to prospective homeowners for home loans including fixed rate, adjustable rate, balloon, and more. What if you have a less than perfect record for your credit and financial dealings? What can you do then?


Perhaps you should consider the advantages of getting an FHA home loan. The FHA or Federal Housing Administration has been helping lots of people since 1934 to become homeowners. In fact, obtaining an FHA home loan provides specific benefits to the homeowner including an easy qualification process. You don't even need to be a first time homebuyer either. In fact, as long as you no longer hold an FHA loan at the time you apply, you can still qualify for an FHA home loan.

Past credit problems do not hold most homeowners back from obtaining an FHA home loan. This is because the FHA home loan program is more flexible and forgiving than conventional home loan programs. However, even with this flexibility, the prospective homeowner must be able to show that he has a record of attempting to pay off his debts despite any problems in his past. Even if the homeowner has a past bankruptcy, he might still qualify for an FHA loan as long as the bankruptcy is at least two years old.

The FHA never lends money to the homeowner. Instead, the FHA provides repayment of the loan to the lender should the homeowner default. An independent lender, including bank, credit unions, mortgage brokers, or savings and loans, makes the decision to lend money to the homeowner. The FHA simply insures the loan and provides a more favorable scenario for the approval of the prospective homeowner's application.

The FHA insures the home loan so that the lender can offer better rates to you. Typically, a 3 % down payment is required. However, this figure might change in the future due to the exorbitant costs of housing in current times. In addition to the easy qualification process, low closing costs and low down payments help to make this an attractive loan. Closing costs and fees can be included in the loan making this type of loan even more affordable. Additionally, you can use an FHA home loan to refinance, fund repairs, or pay for remodeling efforts on your existing home.