What is an FHA Loan?
An FHA loan is a mortgage that is insured by the Federal Housing Administration.
FHA loans are popular for two reasons:
People with lower credit may be more likely to get approved for an FHA loan vs. conventional
FHA loans typically require lower down payments
These two factors make these loans popular among first-time home buyers. These are often young professionals or families just getting started, so they don’t have a lot of credit history or finances for a conventional loan.
What Do You Need For An FHA Loan?
Your lender will determine if you qualify for an FHA loan. They make that decision on several factors, including (but not limited to) the following:
Employment – Do you have at least 2 years of steady employment history? Lenders like to see a steady source of income.
Income – Steady work is great, but how much you make also plays a role. Your income is taken into consideration to calculate 4debt to income ratios for qualifying.
Debt – How much debt do you have? What are your monthly bills going towards debt? A lender doesn’t want to see a large percentage of your income going towards other debts.
Down Payment – At least 3.5% of the purchase price.
So how do you start the process of getting your mortgage? When you contact your loan officer or lender, they’ll help guide you through collecting everything you’ll need to get the loan.
Where Do You Get An FHA Loan?
The best place to learn more about your FHA loan options is a qualified loan officer. Even though the mortgage is backed by the federal government, it is still executed through a qualified lender. Your loan officer will help you understand your options and find the right type of loan for you.
Other times it’s the opposite. Customers are planning on taking out a conventional mortgage, but we help them get into an FHA loan instead because it made more sense.
Contact us today! We’d love to sit down for a few minutes for a free consultation on which type of mortgage we recommend.
*Total Quality Lending is not affiliated with or acting on behalf of or at the direction of FHA or any government agency.
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