For some home shoppers, a conventional mortgage may be out of reach due to poor credit or the inability to come up with a down payment. This is when Federal Housing Administration aid, known as an FHA loan, can help turn dreams of buying a house into a reality. The following is a helpful guide on how the lending program works, its qualifications, and the amazing benefits available. 

What Is an FHA Loan?

The Federal Housing Administration insures loans that are typically available to first-time homebuyers through banks, credit unions, and other lenders. This means the agency will pay off the loan should the borrower default on it. To cover the costs, the FHA charges borrowers a mortgage insurance premium and a fee that’s included in the monthly loan payment for additional risk expenditures. FHA loans can be used to obtain single-family homes as well as duplexes and manufactured homes. 

How Do You Qualify?

To be eligible for an FHA loan, the applicant must provide a down payment of 3.5% of the mortgage amount. There is no minimum income limit to qualify, but FHA lenders prefer a relatively low debt-to-income ratio, which can vary with each loan provider. You’ll need to provide income documentation, such as through full-time employment, that shows your ability to make the monthly loan payments. Applicants can also qualify for an FHA loan with a credit score as low as 500. 

What Are the Benefits?

The biggest perk of securing an FHA loan is borrowers don’t have to come up with the typical 20% down payment conventional lenders prefer. Instead, the 3.5% alternative makes it more financially feasible for individuals to move into a home. Even if you had a recent foreclosure or filed for bankruptcy in the past three to five years, you may still be able to get a fresh start with an FHA loan. There are also no penalties if you pay the loan off early.

If homeownership has been your dream, Deuane Woodard, a loanDepot® loan consultant, can help make it happen. Based in North Richland Hills, TX, Deuane has more than 30 years of experience assisting individuals and families with the FHA loan program. What makes his approach unique is taking the time to walk first-time home shoppers through the entire process. To learn more about applying for an FHA loan, call (817) 875-6043 for a friendly consultation. Visit the website to begin the application process today.

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