FHA Loans Facilitate Home Ownership
The Federal Housing Administration (FHA) program first began in 1934 in an effort to encourage home ownership despite the difficult economic times of the era. The program enables consumers who may not qualify for a standard loan to obtain the financing they need to purchase a home without income limitations.
FHA loans differ from typical loans in that they are insured by the Federal Housing Administration, which is a part of the Department of Housing and Urban Development (HUD). Because this insurance reduces the lender's risk on the loan, lenders have greater flexibility with regard to approving loans. For example, FHA loans are not as restrictive with minimum credit scores so a client may be able to obtain a loan despite having had credit problems or even a bankruptcy in the past. Alternatively, if a consumer does not have a significant traditional credit history, it may still be possible to obtain financing by documenting payment histories on items such as rent and utilities. Individual policies by lender may vary so ask your mortgage consultant for additional clarification.
FHA loans also provide added flexibility when it comes to closing costs and the down payment. Many of the closing costs can be incorporated into the loan, and a down payment of as little as 3.5% of the purchase price is required. The down payment may be obtained as a gift from a family member or through a down-payment assistance program. FHA loans are processed just like any other loan, and they provide a wonderful opportunity for consumers who are seeking to achieve home ownership!
