This is basically federal housing administration loan. This fha loans allow home buyers to finance their desired home from as little as 3% of the down payment. It originated from the 1930 during the great depression which ad sky rocketing foreclosures. Its main purpose was to provide sufficient insurance for the lenders.
The fha loans help first timers in home buying with inability to pay the high down payment percentage which is common with traditional loans. To qualify you have to be of good credit history and also have a stable income which makes you capable of meeting your monthly mortgage payments and closing down payment minimum.
You should get a credit analysis of your debt to income ration. This will determine if you qualify for the fha loans. The monthly total cost of housing should not pass 29 percent of the borrower’s monthly income. These total housing costs include property taxes, insurance and principal interest. Consequently, the borrower’s total monthly cost including long terms debts such as credit cards and total housing costs must not exceed 41 percent of your monthly income.
In order for you to apply for fha loans you need to contact lenders as many as possible specifically, find out if they are offering fha loans. However you will need to be pre-approved for the home loan for you to shop for that particularly home. This will get the pricing range as well as speed of the entire process of home financing.
The fha loans are a good consideration especially from low – middle income families intending to purchase a home for the first time. This lowest the cost of loan process making it very much affordable. Nevertheless, fha loans are only applicable to united states.
There is recent addition that has been made to the loans. The fha-secure which aims at providing aid to victims of financial crisis of 2007. The main goal of fha loans is to help as many people get homes. Qualifying for the loan is not difficult. On the contrary, it is way much better and easier to qualify for fha loans than getting a traditional loan. It enables you to refinance the existing mortgage and it is not limited to one being a first time homebuyer.
However take note that you can’t possibly get more than one fha insured loan at a go. It is possible on the other hand to avail a different fha loan to secure another property. In this case, the value of the current fha loan must not be greater than 75 percent of property value.
A point to take not of is that fha does not really give the loan, but is insures the loan for you and only by qualified lenders. This is why it is advised that you contact different lenders fir5st to find out whether they have fha loans or not. Your application nevertheless will still need to be assessed to check risk of giving you the amount requested. This will take them to your credit records, payment history and current debts. This is done to enable them get a good term for you.