FHA Loan Guidelines

Answer 1

FHA loans allow people to buy homes without having to have ten or twenty percent of the home's value as a downpayment. There are several different types of loans available with FHA backing, each of them designed to help people realize the dream of home-ownership. These loans can also help first-home buyers who have less than perfect credit. Because they are backed by the government, these loans are essentially used to lower the risk associated with certain applicants. Here are the options available to you, and the requirements set forth by the FHA for getting one of these loans.

Loan Types

The FHA will back loans with adjustable or fixed interest rates. You can also get an energy efficient mortgage that will help you making energy efficient improvements to your new home. A graduated payment mortgage is designed for people who currently have low income, but expect to see a substantial rise in their income levels over the next five to ten years. Growing equity mortgages are also designed for those people who currently have a low income level that is expected to drastically increase over time.

Benefits

FHA loans have many features and benefits attached to them. They make qualifying with the bank easier, and costs for closing, down payment and interest charges will be reduced. Special programs are available for FHA loans that help homeowners avoid foreclosure.

Eligibility

Not all borrowers are eligible for these loans. Borrowers must be a legal resident of the United States, they must be of legal age and they must have a valid Social Security Number. They must meet the credit requirements for the loan and they should have enough income to meet the mortgage payment and their other debt payments.

Requirements

When preparing your paperwork and documentation for an FHA loan, you will need to have certain items. You must provide information regarding addresses and employers for the last two years, Social Security Numbers, current check stubs and personal tax returns for the last two years. You will be required to disclose the value of your personal property and any information you have regarding other open loans or real estate that you own. You may also be required to provide your DD-214s or other proof of eligibility.

The FHA has allowed many Americans to finally realize the dream of owning their own home. The loans do require additional paperwork, but they can make the difference between renting and owning if you are a renter who is currently struggling with low income levels, a shortage of funds for a down-payment or minor credit problems.