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First-time homebuyers can take advantage of a mortgage that is backed by the Federal Housing Authority (FHA). These loans offer several benefits such as a low minimum down payment, less stringent credit expectations and more flexible income requirements. Providers of fha home financing don’t simply dismiss an applicant because they don’t meet a certain criterion. The applicant’s whole situation is taken into consideration to determine eligibility.

What Is an FHA Mortgage?

The money you are given to by a FHA-backed mortgage is not from the FHA. You’ll receive the funds from an FHA-approved lender, and the FHA will guarantee the loan. This means that several different lenders will probably offer the same kind of loan. However, lenders have flexibility, so it is also possible that some lenders will give you the loan and others will not. The FHA guidelines are the same for any lender.

What Kind of House Can You Buy?

In general, an FHA-backed loan must be for the homeowner’s principal dwelling and be occupied by the owner. This type of loan is not for purchasing rental or investment property. There are several types of houses approved such as semi-detached houses, condos, row houses and townhouses.

What Is the Most You Can Borrow?

The amount of your mortgage will depend on the statutory limit for the place where the house is located and the maximum loan-to-value ratio of the property you select. This is the ratio of the amount of the mortgage to the appraised value of the property.

Your Credit Score

Mortgages from FHA have a very low credit score requirement of 500. However, they will look at why the credit score is low. In general, an FHA loan is easier to get with a lower credit score. If you have no credit history, you can still be eligible for an FHA loan. They will look at your payment history, and even if you have a previous short sale, foreclosure or bankruptcy, you may still qualify for an FHA loan.

If you have a steady job and would like to purchase your first home, there is a good chance you can succeed with an FHA-backed loan.

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