Although an FHA loan is backed/insured by the Federal Housing Administration (FHA), the loan is not actually made by FHA. Approved FHA Mortgage Lenders are who you would work with to fill out your loan paperwork and get approved. At that time, FHA would guarantee or “insure” the loan. This allows the mortgage lenders a guarantee on that loan.
FHA loans were started in the 1930’s during the Great Depression, when home loan defaults rose sharply,. The intent of these loans was to provide lenders with a type of insurance against home loans. FHA loans are known today as a way of helping buyers get into a home with a lower down payment as that of a conventional loan, which is usually 20%. Most FHA loans require only a 3 1/2 % down payment on a home. Some buyers may qualify for other down payment assistance programs, such as CHFA, which would require even less of a down payment.
Below are some of the requirements for an FHA loan
The home you are purchasing is going to be your primary residence
Steady employment history with the same employer over the last 2 years with the same or increasing income during that period of time
Your credit report should be in good standing with less than two, thirty day late payments.
If you have any bankruptcies, they must be older than two years ago, and your credit must be good for the past two years.
Any foreclosure must be older than three years, and your credit must be in good standing for the last three years.
Mortgage payment must be roughly 30% or less of your monthly gross income
You do not currently own a home
If you can answer yes to the questions above, you should have no problem qualifying for an FHA home.
I would love to help you find your first home. With interest rates still at a record low, and a strong buyers market, you can find a great home and in about 45 days, be moving in!
Call me today to get your home search started!