FHA Home Loan Program – Helping Borrowers With Less Than Perfect Credit
March 21st, 2010 | Author: weissheiss
FHA Home Mortgage programs exist to help borrowers with less than perfect credit get mortgages by offering low interest rates and minimal cash down payments.
Here’s a typical scenario for an FHA Home Mortgage:
You’re a young family just starting out; perhaps your spouse is still in school while you’re working providing the majority of financial support.
No doubt, unforeseen expenses arise causing you to miss a few credit card payments. Unfortunately these do stay on your credit history for 7 years, consequently labeling you a “subprime” borrower in the eyes of the major credit bureaus.
After a year or two your spouse finishes school, starts working and you become a bit more stable financially. Unfortunately, your credit history will haunt you because of the late payments in the past. Your credit score is probably between the 400-650 range.
You are a classic example of a borrower with increasing income going forward yet a bit of credit difficulty in the past.
Can you still qualify for an FHA Home Mortgage?
Absolutely.
This is just one example of what you might experience working with an FHA home loan lender. They’ll dig a bit deeper to help you qualify at a reasonable interest rate. If you show financial responsibility and can reasonably explain any past credit difficulty you have a strong chance of qualifying.
FHA lenders will look at your complete financial profile and not base a loan decision solely on your FICO score. They’ll consider current income and debt to income ratio.
A willingness to pay debt obligations weighs considerably more than just your FICO score with an FHA lender, so if you can show good payment on credit for 2 years, you shouldn’t have a problem getting an FHA loan.
Did you also know that you can use up to 29% of your gross monthly income to pay for your monthly mortgage ( PITI: principal,interest ,tax and insurance) ? Most conventional mortgage programs only allow you to use 28% of your gross income as your monthly payment. This guideline helps you qualify for ‘higher value’ properties.
You really need to take advantage of the low interest rates and ‘less than perfect credit ‘ guidelines which make FHA home mortgage programs affordable.
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