What are FHA Mortgage Loans?
FHA mortgage loans are the type loans in the U.S. market that have a back from the Federal Housing Administration. The federal government particularly supports FHA mortgage loans for FHA certified lenders that gathers support and minimizes the loss risks whenever there is a borrower default as far as mortgage payment is concerned.
FHA mortgage loans came into the market amidst a reign of defaults and foreclosures in the year 1930. This was aimed at providing the lenders with appropriate mortgage insurance on FHA loans which are affordable and within reach of a common man. Today, FHA mortgage loans are a popular choice among first time home owners.
What are the benefits of getting a FHA Mortgage Loan?
FHA Mortgage loans firstly are insured by Federal Housing Agency. The government insures the private lenders for defaults in mortgage insurance on FHA loans.
FHA mortgage loans is the best choice for Individuals who are not in a position to clear 20 percent down payment as in traditional loans or do not get approval for PMI (private mortgage insurance).
The other benefit related FHA home mortgage loan is that it can be transformed into ‘assumable’ mortgage insurance on FHA loans. It implies that if the individual wishes to sell his/her home; the buyer in this case assumes the loan possessed by the seller.
Bankruptcy, foreclosures do not affect the eligibility conditions of a person who wants to buy FHA home mortgage loans.
As compared to other mortgage loans, FHA home mortgage loans employ the simplest means for qualification purpose with very less down payments such as 3.5 percent.
Who qualifies for a FHA Mortgage Loan?
Who qualifies for a FHA Mortgage Loan?
Among various home loans, FHA mortgage loans occupy a favorite position because of very low down payments and greater flexibility options. The fact is that mortgage insurance on FHA loans was constructed keeping in view the home ownership wish of Americans. As such, this mortgage insurance program has become the simplest and most preferred one in real estate market.
The Requirements:
- Consistent history of job (minimum 2 years of service with one employer)
- Steady or ascending salary in past 2 years
- Record of any bankruptcy must be 2 years old and should contain substantial credit for the last 2 years.
- Credit scorecard must display noticeable standing with late payments not exceeding 30 days.
- Foreclosures, if any, must be at least 3 years old with sufficient credit for 3 consecutive years.
When you make a checklist of the above points and try for eligibility concerning FHA mortgage loans, it guides you and future lenders in terms of borrowing knowledge and strength. Also, it creates awareness for monthly payments in mortgage insurance on FHA loans.