FHA Loans
These days, most first time home buyers are utilizing FHA Loans. An FHA loan is a government-insured home loan that is issued by qualified financial institutions, i.e. banks, credit unions, etc.
Because these loans are insured by the government, lenders can feel comfortable about issuing loans with much lower required down payments from home buyers. Currently, FHA loan guidelines require home buyers to make at least a 3.5% down payment, although there are some down payment assistance programs available. In other words, if you buy a $100,000 home, you would be expected to make at least a $3500 down payment. This money must either come from you or be a gift from a family member. It cannot come from the seller, even though the seller is eligible to pay other closing costs on behalf of the buyer.
FHA loans are great for first time home buyers, because they are easy to qualify for, require less of a down payment than many other loan programs, and only require a minimum credit score of 560.
Below is a summary of FHA guidelines:
Minimal Down Payment and Closing Costs.
· Down payment of only 3.5% of Sales Price
· Gift for down payment and closing costs allowed.
· FHA regulated closing costs ensure low fees
· Seller can credit up to 6% of sales price towards buyers costs.
Easier Credit Qualifying Guidelines such as:
· Minimum FICO credit score of 560.
· FHA will allow a home purchase two years after a Bankruptcy.
· FHA will allow a home purchase three years after a Foreclosure.
Easier Debt Ratio & Job Requirement Guidelines such as:
· Higher Debt Ratio's than other home loan programs.
· Less than two years on the job is allowed.
· Self-Employed individuals o.k.
Want more info on FHA Loans and how to get qualified? Fill out the form and we will rush you all of the information.