You could purchase your dream home with help from the government. The Federal Housing Authority (FHA) insures mortgage loans so that lenders can offer you mortgage rates and down payment minimums that are much lower than the average mortgage loan. This means that you could buy a home sooner than you thought, and save thousands of dollars if you qualify for an FHA loan.
Additionally, FHA loans require a lower credit score than many other loans so that you do not have to have perfect credit to be a homeowner. Continue reading this slideshow to learn more about FHA loans and how they may be able to help you.
Although FHA mortgage loans are underwritten by the federal government, you still have to go through a typical mortgage lender, such as a bank, credit union or mortgage broker, in order to apply for an FHA loan.
Applying for an FHA loan is similar to applying for any other type of mortgage except that you can only use specific lenders who offer FHA loans. One of your first steps to apply for an FHA loan should be searching for lenders who fit this criteria. You can do this with a quick internet search of “FHA lenders” or by visiting the official site of the U.S. Department of Housing and Urban Development to use their HUD Lender List Search.
Once you have found potential lenders, you can prequalify for an FHA loan by submitting information about your income, employment, and assets to these lenders. They will want the following information to determine whether they can pre-approve you for a loan:
- Proof of steady employment
- Proof of consistent income
- Credit score of at least 500
- History of bankruptcy and evidence of at least two consecutive years of good credit since bankruptcy
- History of foreclosure and evidence of at least 3 consecutive years of good credit since last foreclosure
The Federal Housing Authority underwrites different types of mortgage loans. Some of these loans help you cover just your mortgage while others can help you pay for purchasing a home and renovating it. Learn about the different types of FHA loans that you can apply for and additional qualifications.