FHA Loans Require Four Sets of Criteria to Qualify

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Since 1934, the Federal Housing Administration (FHA) has been helping people acquire loans for their homes. The FHA, a division of HUD (Department of Housing and Urban Development), truly insures the loan making it so the lender can provide easy credit qualifying, low closing costs and allow the borrower to put down a low down payment. FHA loans are only provided to people who strictly follow the departments standards, or their loan application will be denied. HUD was produced to help make homeownership obtainable to a larger part of the United States population.

Prior to considering applying for an FHA loan, refer to this set of four criteria that must be met in order to qualify:

1. When applying for an FHA loan, the borrower can only select the lenders that are approved or accredited by HUD. Other lenders are not qualified for the program. The applicant can go to the HUD-FHS website to see the official list of lending companies. A lot of borrowers dont realize they can qualify for an FHA loan; all they need to do is call an approved FHA lender and call them up for any other details related to filling out the FHA loan application.

2. The borrowers credit report must be in good standing for the past two years and also must meet some other credit qualifications. HUD is looking for people that have proof of being able to repay, which is based on the borrowers debt-to-income ratio. This is definitely understandable in light of the recent years of loan defaults.

3. If a borrower wishes to refinance under the Home Affordable alteration Program, the application will be denied if they have a default mortgage on file. All problems with the past loan servicer regarding delinquency must be settled, prior to being able to refinance.

4. If a borrower wishes to acquire a 203(k) Rehabilitation Program, they need to meet the criteria of the HUD ordinances and the Minimum character Standards of the financing program. This new loan program is referred to as the 203k Rehab program, and is HUDs main program for the repair and rehabilitation of single family similarities. This loan is used many times for neighborhood and community revitalization. HUD takes this program very seriously and strongly backs this program by providing generous financial sustain to lenders who participate.

If the borrower can qualify for their home loan, FHA allows for a down payment as low as 3.5% of the buy price. The beauty of the loan is that most of the fees and closing costs associated with the loan are included within it. This is only obtainable on 1-4 unit similarities. FHA also offers a loan that allows the homebuyer to buy their home and have money for fixing up the home all included in one loan. If you already own the home you want to re-form, the borrower can refinance their home and include the cost of fix up all in one loan.

The set of criteria for being able to acquire an FHA loan is fairly simple and understandable. It also applies to minority borrowers and borrowers with sub par credit history. These HUD loans (which are truly FHA loans) are serviced by lenders nationally, not just for small urban locations. A borrower can acquire an FHA loan for a 2nd or 3rd home, although only one FHA loan can be held at a time. Your lender will have more details regarding this set of four criteria freely obtainable to you. They will also have access to the HUD foreclosure homes that have been in the news lately, which the borrower is able to bid on.

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