fha loan guidelines

FHA Loan Guidelines

FHA Loans have numerous advantages over conventional loans, which include lower down payments and credit-qualifying guidelines that are typically more relaxed. The FHA loan was created to stimulate home buying throughout the country. The FHA can help people to obtain a loan with little down payment. The FHA does not supply the loan; it simply insures the loan to limit the risk to the lender.

Benefits of FHA Loans:

• A 3.5% down payment, as opposed to a 5% down payment on traditional loans
• Low monthly mortgage insurance
• Low closing costs that are overseen by HUD
• More relaxed credit score requirements
• Qualify for a loan two years after a bankruptcy
• Qualify for a loan three years after a foreclosure

The FHA loan guidelines are more relaxed than conventional loan guidelines; this includes less strict regulations about past bankruptcies and/or foreclosures, job requirements, use of alternative credit, and debt-to-income ratios. The FHA ensures that their interest rates remain competitive with the interest rates of conventional loans.