Understanding FHA Home Loans

FHA home loans are backed by the Federal Housing Administration and are accompanied by flexible terms and less stringent borrower requirements. These loans have allowed millions of first time homeowners to successfully purchase their dream homes, which would have not been possible with conventional mortgages.

FHA loans require a minimum down payment of a mere 3.5% of the value of the home, have realistic and reasonable credit expectations and flexible income requirements. Providers of FHA backed loans look at the whole picture and do not reject applicants who fall short on any one particular criterion.

Borrowers must keep in mind that the money for Federal Housing Administration loans is not given by the FHA. FHA just guarantees the loan which the borrowers receive from their approved lenders. This means that different lenders might offer you similar mortgage terms or might turn you down depending upon their discretion as the FHA offers lenders flexibility to determine their own eligibility benchmarks. 

So, where one lender might refuse your application for an FHA loan, the other might approve it in an instant. The key is to approach multiple lenders.

According to the FHA guidelines, the minimum credit score requirement for a mortgage is 500. However, most lenders will consider anything below 620 to be subpar and having a score below that might get your application cancelled. 

Also, having no credit history is not a problem when it comes to taking an FHA loan. The lenders can use other payment records like rent payments to determine your eligibility.

Apart from that, FHA loans also have very lenient requirements in terms of income, closing costs, debt to income ratios and mortgage insurance. This is the reason they are so popular among the masses.

To check your eligibility for an FHA backed mortgage, call All Western Mortgage on 702-850-2790 now and if you need more info about the same, click here.