FHA Loans: What They Are
And Who Qualifies
In your house hunting you
may have come across a mention of FHA loans.
FHA stands for Federal Housing Authority, and the loans available
through this program are designed to help people qualify for loans and purchase
homes more easily. If you are wondering
about getting an FHA loan for your home purchase, the first thing to do is to
learn a little about them and find out if you might qualify.
FHA And HUD
The FHA is part of HUD-the
U.S. Department of Housing and Urban Development. It exists to help people who might not
otherwise be able to apply successfully for a home loan purchase a home. The FHA insures the loan against default,
which means that if the buyer fails to pay the mortgage, the lender will not
lose the money because the FHA will cover it.
Who Can Get An FHA Loan?
Just about anyone can
apply for an FHA loan. There are no
income level requirements, either on the high or low end, and even people with
some credit problems can qualify. You will
have to meet a certain credit level, however, and you must have a debt to
income ratio that is acceptable for the program to prove you can pay the
mortgage.
There are specific FHA
loan programs for first time buyers, seniors, and people looking to purchase a
“fixer-upper” home as well. The many programs
can suit just about any buyer.
Limits With FHA Loans
The main problem many
people run into is that the limit on how much you can borrow on an FHA loan may
make it difficult to purchase the house you need. Allowable amounts are usually on the low end
of the market, and it can make house hunting a challenge. If you are willing to take on a home that
needs some work, you will probably have better luck with an FHA loan.
If you need to buy a home
with a low down payment and are having a little trouble qualifying elsewhere,
an FHA loan might be a good option for you.
Every state has different laws and requirements for qualification, so
check with your state to find out what the process will be. FHA loans can help people get into a house
who might not otherwise have the opportunity to buy.
