Know FHA Guidelines Before You Attempt To Buy A Home
The Federal Housing Administration or FHA is a government entity that helps lenders have security when giving out home loans. It's a good idea to check into financial institutions that are backed by the FHA because they will be more likely to offer you a home loan. In some cases even buyers with no money to put down have been able to settle into a home because of the Federal Housing Administration. A lot of people are unfamiliar with these type of loans so it's a good idea to get an idea of the guidelines outlined by the FHA so that you know if you qualify for a home or not.
Under certain guidelines a person must have a solid credit score to be eligible for a home loan through the FHA. A person cannot have had a foreclosure on a home, filed for bankruptcy, or have a lot of late payments on their credit history. Your credit score must be clean and you need to have at least two lines of credit open for the past couple of years to be considered for this type of loan. This means that you need to have credits such as a credit card or loan open and active so that a lender can see you are reliable and make payments on time.
Another factor that is considered when applying for a loan through FHA is a person's ability to pay back the loan. Depending on the financial institution and the state and county a person is applying in will determine a person's eligible loan amount. To figure out what type of home loan amount you qualify for you need to get pre qualified first. Then once you understand how much of a loan you qualify for you can make an attempt to purchase a home within that range.
Remember that there is going to be a closing cost and mortgage insurance. Lenders are going to look into your debt ratio to figure out if you are not at high risk for a loan. If you have a lot of debt then a lender may not feel comfortable providing you with a home loan. It's a good idea to pay down your total debt below 30% before you make an attempt to purchase a home. The lower your debt the higher your credit score will raise and the better chance you have at obtaining a home loan through a lender approved by the FHA.
With a good understanding of how FHA guidelines work you can get qualified for a nice home loan. These loans have helped many first time homebuyers afford their first piece of property. Buying a home is one of the biggest moves you can make in life. Find a way to position yourself so that you can move into a new home as soon as you get a chance. When you know how much you can afford you can choose a home that is suitable for you and your family.
