FHA First Time Home Buyer: Apply for an FHA Loan

With the current crisis in the credit market and the slowdown in the economy, buying a home can be difficult. Home prices are low right now, now is the time to buy a home, if you can qualify for a mortgage, that is. However, there is good news for potential homebuyers who do not have good credit. FHA home loans are fairly easy to qualify for and provide the flexibility that a first-time homebuyer may need when purchasing a home.

Since the subprime crisis collapsed, lenders have made it harder to qualify to buy a home. What makes the FHA home loan the best thing since sliced ​​bread. An FHA home loan does not require as much down payment as a conventional loan would. The current down payment requirement for an FHA home loan is just 3%, compared to the required 5% down payment on a conventional home loan. Plus, an FHA home loan will allow you to keep buying a home, even if your debt-to-income ratio is over 43%. ). ) plan with your employer. FHA home loans also have more relaxed credit requirements compared to a conventional mortgage.

With an FHA home loan, many negative things on a credit report, like medical bills, won’t play as big a role in qualifying for a loan. Some lenders will even approve a borrower with a credit score as low as 550. This single warning can be the difference between getting approved for an FHA loan and being turned down by a conventional lender. Another benefit of getting an FHA home loan would be the lower than typical interest rate.

Effective October 1, 2008, FHA stopped accepting seller’s down payment assistance programs. However, before this program ended, many homebuyers bought houses with no money down.

The down payment assistance program allowed home builders and sellers to give the seller the money needed for a down payment, while paying the buyer’s closing cost. This is how home buyers were able to make 100% of home purchases. The current FHA home loan program still allows 100% financing, however, the seller can no longer give the buyer money for a down payment, but a relative of the buyer can give or loan the money to the buyer. Thus creating again the purchase of 100% housing. But keep in mind that if the buyer borrows the money from a relative or close family friend, this loan will also count against their debt-to-income ratio. And again, as long as the debt to income ratio is below 43%. You should have no problem getting this type of financing.

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