FHA First Time Home Buyer - Apply For FHA Loan

The Perfect Home Loan For A First Time Home Buyer. An FHA Home loan could make the difference between being approved for financing and being turned down for a conventional home loan.

FHA First Time Home Buyer - Apply For FHA Loan
By [http://ezinearticles.com/?expert=Marks_Anderson]Marks Anderson

With the current credit market crunch and the slowing economy, home buying can be tough. Home prices are low currently in now's the time to purchase a home, if you can qualify for a mortgage, that is. However, there is good news for would-be homebuyers that do not have great credit. FHA home loans are fairly easy to qualify for, and they provide the flexibility that a first time homebuyer may need in order to purchase a home.

Ever since the crash of the sub prime mortgage melt down, lenders have made it more difficult to qualify to purchase a home. Which makes the FHA home loan the best thing since sliced bread. An FHA home loan does not require as much of a down payment as a conventional loan would. The current down payment requirement for an FHA home loan is only 3%, compared to the mandatory 5% down payment on a conventional home loan. Also an FHA home loan will allow you to still purchase a home, even if your debt to income ratio is higher than 43%, however, you will need to have other compensating factors, such as cash reserves in the bank or a 401(k) plan with your employer. FHA home loans also have more relaxed credit requirements compared to the conventional mortgage.

With an FHA home loan, many negative things on a credit report, such as medical bills, will not play as big a role in qualifying for a loan. Some lenders will even approve a borrower with a credit score as low as a 550. This one caveat alone can be the difference between getting approved for a FHA loan and being turned down by a conventional lender. Another benefit with securing an FHA home loan would be the lower than typical interest rate.

As of October the first 2008, FHA stopped accepting seller down payment assistance programs. However, before this program ended, many homebuyers purchased homes with no money down.

The down payment assistance program allowed homebuilders and home sellers to give the seller the money necessary for the down payment, while also paying for the buyer's closing cost. This is how homebuyers were able to do 100% home purchases. The current FHA home loan program does still allow for 100% financing, however the seller can no longer give the buyer money for the down payment, but a relative of the buyer can give or loan the money to the buyer. Thus, creating the 100% home purchase again. But keep in mind that if the buyer borrows the money from a relative or a close friend of the family, this loan will also count against your debt to income ratio. And again, as long as you're debt to income ratio is below 43%. You should not have a problem getting this type of financing.

For more information on FHA financing Visit:

Kevin Harbor is a loan officer and FHA home loan specialist for http://221HomeLoans.com

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