Regardless of whether you are a first-time home buyer or are in the market for your next home, the Federal Housing Administration has loan programs that can assist anyone who needs help with financing. That said, what exactly can the FHA do to better your circumstances?
The perks of going for an FHA mortgage are plenty and can prove to be incredibly useful tools for aspiring homeowners. Even those who have experienced foreclosures and bankruptcies are still accommodated. Consider FHA to be the giver of second chances in the world of real estate.
How to Qualify for an FHA Home Loan
The most sought-after features of an FHA loan is its ability to let homebuyers put in only 3.5% down payment, compared to 5% to 20% in a conventional loan. Those who can reach FICO ratings of 580 can do just that, while those whose credit scores are anywhere between 500 to 579 can still be given the green light. However, they will need to fork out a 10% down payment. Next to Veteran Affairs and USDA home loans, one can say that the FHA is the kindest federal government loan program there is.
While the first two loan programs don’t call for down payments at all, only the FHA can accommodate civilians who want to purchase homes anywhere they please in the country. USDA borrowers may come close, but the USDA has stringent policies with regards to property locations.
To further substantiate, the FHA was conceived in 1934 with the sole intention of stabilizing the real estate industry and boosting the standards of living in America, all while ensuring decent home financing options to the country’s citizens. That said, the FHA doesn’t actually let out loans, nor do they sign checks or give out cash. Instead, they offer insurance to these private lending companies who in turn are in charge of the funding involved in the whole mortgage equation.
A few perks that make the FHA amazing to a wider variety of aspiring homeowners is the opportunity to use gift funds in closing costs and the chance to have the loan assumed in the distant future should a loanee decide to do so. These specific benefits aren’t entirely available elsewhere. Still, a few good things one needs to make sure of before even applying for this mortgage type is to have enough funds for a down payment and closing costs.
FHA Home Loan Requirements
The documents needed for an FHA application are the following:
- Employment history in the past two years;
- A 30-day paycheck stub;
- Individual tax returns (past two years), current income statement and business balance sheet for self-employed individuals;
- Last two years W-2s, 1099, etc.;
- Recent two months bank statements for all checking and savings accounts;
- Relevant information for all open loans
If you are a first time home buyer and have further concerns and questions regarding FHA guidelines and rates, feel free to get in touch with a trusted FHA-approved mortgage lender now to get started on the path to home ownership.