An FHA loan is a type of home loan that is insured by the government and the Federal Housing Administration. This protects lenders from losing money if you can't pay. Therefore, many lenders are willing to give FHA home loans to people who may not have normally qualified. Check out these types of people who should consider an FHA home loan.
People With Poor Credit
If you don't have amazing credit, you can still get your own home. FHA home loans are less strict regarding credit scores. Even a score as high as 620, which is quite common is still considered low credit, which will make it difficult to get a traditional home loan. When you apply for an FHA home loan, your credit score is still pulled and examined, so it is important you have a good history of paying bills even if your score is low. In some cases, you may be required to put down a slightly higher down payment if your credit is particularly bad.
People With High Debt-to-Income Ratio
In some cases, you haven't fallen behind yet, so your credit is still good. However, you still have high debt-to-income ratio. To lenders, this means you may be one more bill away from not being able to pay your debts, which will plummet your credit score. For most lenders, you want to have a score of around 28 to 36 percent. However, with FHA loans, you can have closer to 31 or 43 percent of your income going to debt and still qualify. This is because the loans are secured by the government, protecting the lender if you do fall behind.
People Without a Down Payment
If you want to qualify for a traditional home loan, you'll probably need to pay a 20 percent down payment. This can be nearly impossible for many families who are struggling to pay rising rent costs. Luckily, with FHA home loans, you only need a down payment of about 3.5 percent of the total cost of the home, making it possible for many people to buy homes. If you are a veteran or work with agriculture, you may qualify for no down payment, but it is difficult to qualify.
FHA loans are helping many people who wouldn't' normally qualify for a home loan. If you are interested in getting your own home, but you don't think you can get a loan, contact a lender in your area today and ask about FHA loans.Share