FHA Loans

FHA loans help millions of Americans to own their own homes. FHA loana are federal assistance mortgage loans in the United States, insured by the Federal Housing Administration. FHA loans may be issued by any federally qualified lender.

The beauty of FHA loans is that they have more lenient lending requirements than conventional mortgages. Lenders are nervous about certain borrowers, because they appear to have a higher risk of default. FHA loans are insured, which reduces the lender's risk and therefore makes the lender willing to advance the funds.

Who Needs FHA Loans?

If you have a regular job that pays well, any lender is going to smile upon you. IF, however, you have a collection of part time jobs, are a contractor, have been a permanent casual employee for years, or you are self-employed, the average lender is going to doubt the security of your income.

This is silly, of course, especially in the current economic climate, where no job is secure and major companies like GM are filing for bankruptcy protection, but I digress. Banks are biased.

If your income is steady, but it comes from sources traditional banks regard with suspicion, then you will find a loving home with FHA loans. AS long as you can show the income has been there for at least three years, you can meet the FHA loans income requirement.

FHA loans will also allow you to make your mortgage payment a higher percentage of your income overall than traditional lenders. The difference may only be a few percentage points, but in many cases it makes the difference beqteen qualifying for a mortgage versus a life of renting.

FHA Loans And Bad Credit

A real bonus for those who have a bumpy credit record is the FHA loans are particularly open-minded when it comes to bad credit.

You can get FHA loans just two years after being discherged from bankruptcy, and just three years after a foreclosure or deed-in-lieu.

FHA loans have historically allowed lower income Americans to borrow money for the purchase of a home that they would not otherwise be able to afford. The program originated during the Great Depression of the 1930s, when the rates of foreclosures and defaults rose sharply, and the program was intended to provide lenders with sufficient insurance.

Given the right incentive (ie the right insurance), lenders have shown themselves to be willing to be very understanding about relaxing their strict lending guidelines.

As a result, millions of American children have grown up with the security of home ownership, rather than the uncertainty and uneven home quality of life the rental market.

To find out how you could benefit, visit FHA Loan Requirements.