With the introduction of the FHA home loan, many low-income Americans could afford to get a loan to buy their homes. FHA home loans were designed in 1930’s at the time of Great Depression. The government worked to subsidize loaning programs through FHA in order to face the rising rate of defaults and foreclosures.
The good news is FHA open to every American. But they have to follow the guidelines laid down while applying for it. To determine if you qualify for an FHA home loan, use these guidelines. Find out if you can benefit from FHA’s easy mortgage loan plans.
1. First and foremost, you must have a stable employment record. This will enable you to prove to the agency that you have been employed by your present employer for at least 2 years. Stable job and income is the crucial factor. This is the basic requirement of FHA.
2. Your income should either be increasing or at least consistent. To enable FHA to accurately judge your payment capability, you have to show that your present job earns you a definite income. But if that is not possible you income should steadily show an upward trend but not a varying one.
3. You should have an impeccable credit history. Your credit report certainly tells a lot about your financial status. It is FHA’s requirement that all their applicants should have clean credit standing. Besides that, they also require that there should not be a single amount outstanding for over a month for at least the past 2 years in their credit reports.
4. You should also be able to prove that you have no history of bankruptcy. Even if there was one, it should be at least 2 years old. You should also be able to show that you have restored your financial stability in the past 2 years and your credit standing should be flawless for the 2 successive years.
5. If there are any foreclosures, they should be at least 3 years old. For the last 3 years, you should have a good credit standing.
6. The maximum loan amount you can apply for should be 30% of your total monthly income. FHA will qualify you for a loan corresponding to your gross income. So don’t apply for a loan that is over 30%. Your application will be rejected. Go for a house that fits within the fixed limits.
These are the various points to think about while applying for an FHA loan. You should successfully qualify for all the steps mentioned above. These are the exact steps that FHA is following as of now.
But you should be aware that pre-qualifying for the loan is the initial step. It does not assure anything. All it implies that FHA will conduct a review of your application and take it off from there. Your dream of purchasing your ideal home is still in infancy.
Pre-qualification is the starting step of procuring a loan, though. But it goes without saying, it is a crucial step. If you fail the pre-qualification stage, it is impossible for you to buy the house that you always wanted, at least not from FHA.
What actually happens in the pre-qualification step is that your income, your assets, and your repayment ability are assessed. You have to show it to the lender to whom you have applied for a loan. They will evaluate your case further. Once they are assured that you have financial stability, they will approve your loan application.
Now that you know what it contains, go ahead and begin evaluating yourself for an FHA home loan. Use the facilities they are offering right away. This is your opportunity to buy the house of your dreams.
Tags: FHA home loan, How to Pre-Qualify for an FHA Home Loan