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• Ability to repay the loan
• Payment history
• Location and type of home
A credit challenged borrower is more likely to choose FHA because of the fair treatment of borrowers. The mortgage rate offered to lower credit score borrowers is typically much higher than market mortgage rates but with FHA. If you want to be sure you are not taken advantage of by a mortgage lender, FHA may be a great option. The loan program for first time home buyers has regulations built in to the guidelines to make sure no home buyer is taken advantage of.
Congress created the Federal Housing Administration (FHA) in 1934. The FHA became a part of the Department of Housing and Urban Development (HUD) in 1965. During the 1940’s, FHA programs helped finance military housing and homes for returning veterans and their families after the was. With the help of FHA, by 2001, the nation’s home-ownership rate had soared to an all time high of 68.1 percent.
When qualifying for an FHA loan you must determine how much home you can afford. How much you can afford will depend on what your current credit obligations are and your current rate of pay. Determining how much you can borrow is done by calculating your debt to income ratio. To learn more about debt to income ratios and other guidelines visit HUDS FHA Guidelines section.
To qualify for an FHA Home Loan your previous payment history will be considered. An underwriter will need to verify that you have established a history of paying your bills in a timely manner. While your payment history does not need to be perfect, you do need to show a pattern of on time bill payment.
Traditionally, your credit report is reviewed to determine your payment history. However, if you do not have any bills that show on your credit report there are cases where ‘nontraditional’ credit accounts may be used to determine your payment history.
FHA Home Loans are intended for families interested in purchasing single family, stick built homes. Investment properties, and homes that are considered income producing properties are not eligible for FHA financing. An FHA loan is a perfect loan for a home that is considered ‘move in ready’ and not in need of major repairs.
FHA Home Loans are available throughout the entire country.
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