Purchasing a home loan is not always an easy feat, and people with lower incomes, including first-time homebuyers, often have a hard time getting approved for a home loan. So what are the options? For individuals who need a little extra help, an FHA loan might be the answer you are looking for.
Where do I start?
The first step is finding a lending institution that has an FHA program. Once you apply for an FHA loan, the Federal Housing Administration will examine your application for the following items: your income to debt ratio, how (and if) you paid previous debts, overall income, number of family members, etc.
Bad credit applications will generally be approved if it has been two years since bankruptcy and you've made debt payments on time for at least 12 months. If they decide that you meet the qualifications and are an acceptable candidate, they will approve the loan.
What are the Benefits?
Besides increasing loan acceptance by private lender, here are some of the more obvious benefits:
- Lower down payment
- Lower closing costs
- Lower interest rates
- Helps for those with little or no credit
- Greater leeway for those with a bad credit history
What are the disadvantages?
The loan process can be very tedious. It may take a while to figure out which type of loan to apply for and meet all the qualifications before getting approved. There are stringent guidelines for qualifying the property for an FHA loan, and the specific specs and qualifications will vary per state and area. So make sure you are working with someone who is an expert on this type of loan program.