What is an FHA Loan?
The Federal Housing Administration (FHA) was established in 1934 to improve housing standards and conditions and to offer a suitable home financing system through insurance of mortgages. Families that would otherwise be excluded from the housing market were finally able to buy the homes of their dreams under this program.
An FHA loan allows you to buy a house with as little as 3.5% down of the purchase price, instead of the higher percentages required to secure many conventional loans such as 5-20%. Taking advantage of the FHA loan program is a great way for first time Home buyers.
The Federal Housing Administration (FHA) does not make home loans–it insures them. If a home buyer defaults on his/her, the lender is paid from the insurance fund.
FHA Loans vs. Conventional Home Loans
The main advantage of FHA home loans is that the credit qualifying conditions for a borrower are not as stringent as conventional financing. FHA will allow the borrower who has had a few “credit issues” or those without a credit history to buy a home. FHA will require a sensible clarification of these derogatory items, but will approach a person’s credit history with credit underwriting. Most particularly, borrowers with justifying circumstances surrounding bankruptcy that was discharged 2 prior, may qualify for FHA financing. Conventional financing, on the other hand, relies heavily upon credit scoring and history. Credit scoring is a rating given by a credit bureau (such as Experian, Trans-Union, or Equifax) that grades you upon your credit profile of past history.
Apply Now To Find Out:
- How much we can lower your payment.
- How quickly we can close your loan.
- How we will help you improve your credit scores.