FHA loans to finance the purchase of a home differ from regular loans one obtains from a lender or a bank. The rules are less stringent and there are a number of options which are available to the person making the purchase. These loans are not difficult to obtain regardless of the home's location.
Only certain homes are qualified for these loans. They can be single family houses, condos, modular home, double-wide mobiles and two to four unit arrangements. They do not make loans on things such as hotels, clubs, boarding houses and so forth.
The FHA loan is not as strict on many things required to qualify with a regular loan. For example, the down payment is very low and, if unable to make this down payment, there are agencies, which will make the down payment for you. There are different rules regarding its repayment.
The down payment assistance is offered by non-profit organizations as well as State, County and City programs. None-profit programs offering assistance with down payments are Nehemiah, up to 3%, HART, up to $15,000 with closing costs and Neighborhood Gold, up to 20%. The State, County and City Down Payment Assistance programs vary but usually require a second mortgage.
The latter down payment assistance programs are very generous. Some do not require any payments at the beginning and some even forgive the loan entirely if someone lives in the home for ten to twenty years. This offers an excellent opportunity for a person with a job and a good work record who does not have sufficient funds for a down payment on a home.
Things such as a credit rating is not as stringent with this loan than it is with traditional ones. However, it must show less than two monthly late payments in the past two years and a minimal score of 620. In some cases, no credit score at all is accepted.
Proof of being able to meet the monthly payments, such as steady employment for two years is required with the income being the same or increasing. Also, any bankruptcy must two years old or more and credit must be good for that period of time. A person must show that the house payment would not be more than 30% of the total income. If one has had a foreclosure, it must be at least three years old with a good credit record since.
Occasionally one can purchase a HUD home. This type of home is where someone who purchased a home with an FHA home loan was unable to make the payments. Such a home is usually sold by auction with an outside service. It is often possible to get one of these houses with an FHA loan at considerable savings. Whether purchasing a newly built home, a foreclosed one, or one that is just on the market a FHA loan is usually the best type of loan to get. It is not as stringent in requirements, has a low interest rate, and offers a number of financing opportunities for the purchase.
First Nationwide Lending is a Boca Raton Florida mortgage company offering purchase and refinance FL mortgage programs.
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