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. The loans available through this program are designed to help people qualify for loans and purchase homes. If you are curious about getting an FHA loan for your home purchase click here to be connected to one of our Mortgage Loan Originators for assistance.
FHA And HUD
The FHA is part of HUD—the U.S.Department of Housing and Urban Development. The FHA exists to help people who might not otherwise be able to apply successfully for a home loan to purchase a home. The FHA insures the loan against default, which means that if the borrower fails to pay the mortgage, the lender can seek to recover under the FHA insurance.
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-downpayment 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.
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