| With the current credit market crunch and the slowing | | | | role in qualifying for a loan. Some lenders will even |
| economy, home buying can be tough. Home prices are | | | | approve a borrower with a credit score as low as a |
| low currently in now's the time to purchase a home, if | | | | 550. This one caveat alone can be the difference |
| you can qualify for a mortgage, that is. However, there | | | | between getting approved for a FHA loan and being |
| is good news for would-be homebuyers that do not | | | | turned down by a conventional lender. Another benefit |
| have great credit. FHA home loans are fairly easy to | | | | with securing an FHA home loan would be the lower |
| qualify for, and they provide the flexibility that a first | | | | than typical interest rate. |
| time homebuyer may need in order to purchase a | | | | As of October the first 2008, FHA stopped accepting |
| home. | | | | seller down payment assistance programs. However, |
| Ever since the crash of the sub prime mortgage melt | | | | before this program ended, many homebuyers |
| down, lenders have made it more difficult to qualify to | | | | purchased homes with no money down. |
| purchase a home. Which makes the FHA home loan | | | | The down payment assistance program allowed |
| the best thing since sliced bread. An FHA home loan | | | | homebuilders and home sellers to give the seller the |
| does not require as much of a down payment as a | | | | money necessary for the down payment, while also |
| conventional loan would. The current down payment | | | | paying for the buyer's closing cost. This is how |
| requirement for an FHA home loan is only 3%, | | | | homebuyers were able to do 100% home purchases. |
| compared to the mandatory 5% down payment on a | | | | The current FHA home loan program does still allow |
| conventional home loan. Also an FHA home loan will | | | | for 100% financing, however the seller can no longer |
| allow you to still purchase a home, even if your debt to | | | | give the buyer money for the down payment, but a |
| income ratio is higher than 43%, however, you will | | | | relative of the buyer can give or loan the money to the |
| need to have other compensating factors, such as | | | | buyer. Thus, creating the 100% home purchase again. |
| cash reserves in the bank or a 401(k) plan with your | | | | But keep in mind that if the buyer borrows the money |
| employer. FHA home loans also have more relaxed | | | | from a relative or a close friend of the family, this loan |
| credit requirements compared to the conventional | | | | will also count against your debt to income ratio. And |
| mortgage. | | | | again, as long as you're debt to income ratio is below |
| With an FHA home loan, many negative things on a | | | | 43%. You should not have a problem getting this type |
| credit report, such as medical bills, will not play as big a | | | | of financing. |