FHA Short Term Home Loans – Home Mortgage Solutions For First-time Buyers

FHA or Federal Housing Authority has started a mortgage scheme that makes it easy for first-time home buyers to finance their homes. This is a welcome addition to the existing home loan or mortgage schemes in the US. Moreover, this mortgage scheme from the FHA has fewer borrowing requirements which make it a popular choice among hundreds of home buyers. Some of its unique selling features such as low down payment (3.5%), flexible income and reasonable credit requirements. As compared to traditional loans, FHA home loans are more flexible as the providers of these loans look into a broader prospect rather than any single criterion.

FHA home loan background

It might sound easy that procuring FHA home loans are easy, but not all are eligible or even qualify for such loans. Borrowers find it difficult to understand the eligibility criteria that FHA home loan lenders look for. Moreover, this home loan is not provided by the FHA to the borrowers, but there are approved lenders who provide such loans. FHA only approves and guarantees the home loan. Therefore, you will find that all the FHA approved lenders offering the same housing mortgage throughout. These lenders operate under the regulation of FHA, so not matter which lender you choose for financing your home, the guidelines and the eligibility criteria remain the same.

Eligibility and mortgage

It is surprising to know that though FHA approved lenders operate under FHA guidelines with www.thenetlend.co.uk, they have been given the power to set their own eligibility criteria when it comes to providing loans to borrowers. Some lenders may have higher eligibility requirements compared to others. So, a borrower may get a home loan from one lender, while others might refuse. FHA home loan is only applicable for residences owned and resided by the borrower himself. This scheme is not meant for rental properties or investment. Townhouses, detached houses, row houses and semi-detached houses that fall within an FHA approved condo project are all eligible for FHA mortgage schemes.

Credit score and FHA loan

Just like traditional loans, FHA home loans are given to individuals on the basis of their credit scores. A minimum credit score of 500 has been set for FHA loans, where anything under 620 has been regarded as subprime. Therefore, borrowers having credit scores below 500 automatically disqualify for such loans. Credit score is also applicable for the lenders as they need to maintain a minimum score that FHA has set. However, these home loans are ideal an easy to get for people with bad credit scores or financial problems. If the borrower doesn’t have a credit history, he/she can still apply for an FHA home loan. Lenders look for past payment records such as house rent payments and utility payments for such borrowers.

FHA loan underwriting process

The underwriting process that is followed in FHA loan schemes is known for its flexibility. The ability to repay the loan money for every borrower is evaluated in a flexible manner. Since FHA loan is based on a broader picture, even borrowers with bad credit ratings and other financial problems are eligible for a loan. There are plenty resources available online for interested FHA loan borrowers which can help them in understanding the whole picture of FHA mortgage schemes. Moreover, they will get all the information related to eligibility criteria and credit scores which can be extremely beneficial when applying for FHA home loans.