Fha Loans

Written by Ingrid Chen
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If you want to buy a home but think that you can't afford a down payment, you might want to look into FHA loans. These are loans for the purpose of buying a home where you can pay as little as three percent for your down payment. Most mortgages require a much higher percentage than this. An FHA loan is perfect for first-time buyers or anyone currently experiencing a lack of funds.

The way an FHA loan works is this--FHA insures the loan as opposed to actually supplying the loan. If you default on the loan, the lender is paid through the insurance fund. You can apply for this kind of loan online or with the lender of your choice. Before you go with one company, make sure you do a good bit of shopping around, as you will be paying this for quite some time.

Qualifying for an FHA Loan

In order to qualify for such a loan, you have to meet certain requirements. First, you have to have decent credit. It's rare that people with bad credit will be approved for an FHA loan. You will also need to prove that you have the income necessary to make your monthly payments and make them on time. You'll need cash for your down payment and your loan origination fee.

It's also important that you are able to pay all your closing costs. These include such things as homeowner's insurance and private mortgage insurance (if you're paying less than 20 percent down). There is also most likely a fee you will have to pay that is for the FHA insurance fund.

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