The United States government actually insures the mortgages of FHA (Federal Housing Administration) home loans. These loans are not actually made by the FHA. What happens is a group of qualified commercial lenders makes the loans, and then the FHA in turns insures the loans.
Low-income Americans were now able to secure financing with the introduction of the FHA home loan. During the Great Depression, in the 1930’s, is when the idea of the FHA home loans came to fruition. The government chose to do this by subsidizing loans because of the growing number of foreclosures and defaults.
All Americans are eligible, if you follow the set guidelines for applying for an FHA home loan. Two see if you are qualified for an FHA home loan read the following checklist. Hopefully the easy mortgage plans offered by the FHA will be your ticket to home ownership.
1. The first step is to be able to show a consistent history of employment. You need to be able to show the agency a two-year minimum of employment with your current employers. The FHA’s primary requirement is your income and the stability of your job.
2. You must have a consistent source of income and it must increase. By being able to show you earn a fixed salary or income at your current job they will be able to correctly assess your ability to repay the loan amount. A fluctuating income is not good; your income should show a steady rising pattern.
3. Your credit report should shout “good candidate”. A lot is to be said for a solid credit report. A good credit standing is also a pre-requisite for all applicants. The FHA requires that you must be able to show, by your credit report, that for the past two years you have not had a single payment over a month overdue.
4. No history of bankruptcies should show on your credit report. If you have had a bankruptcy it should be more than two years old. Your credit report should show that you are now back to financial stability and have had two consecutive years of good credit standing.
5. If you have any foreclosures they must, at the very least, be three years old. Bankruptcy also follows the rules noted above. With a foreclosure on you report it is an absolute must that you have a good credit standing for the previous three years.
6. The amount of loan you are applying for cannot exceed 30% of your total monthly income. If you have qualified with all the other requirements keep this one last detail in mind: Your loan amount approved by the FHA will be based on your gross monthly income. If your loan request is over the 30% of your gross income, the FHA will just deny the request. Understand your limits and look for a home with in your restrictions.
When applying for an FHA loan there are many different points to consider. Every condition that is listed above you must qualify for. The FHA is currently following these guidelines exactly. You know that Pre-qualifying is just the first step; nothing is guaranteed. This just means that there are merits to your application to be considered by the FHA. But if you have made it this far owning your dream home is much closer to being a reality.
Learn about more moving and home loans at http://www.moving-and-more.com - a website that offers articles on moving and relocation, selling a house, buying a house, finding a new job, and types of home loans.
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