To residents of the United States who have a low to medium income, there is an option to get residential mortgage loans by applying to The Federal Housing Administration (FHA). There are many advantages to home ownership with this program that include: low down payments, lower closing costs and quickly completed transaction due to the mortgage being secured by the US government.
An Alternative to High Interest Bad Credit Mortgage Loans
There are no age limits and no required income levels, however an applicant must be able to prove that they can actually meet the payments of the mortgage. Since the deciding factor is not a credit score of an individual but the value and condition of the house to be mortgaged, the main issue is having an approved FHA appraiser evaluate the worth of the house. This will be especially useful for those individuals who believe they must search for bad credit mortgage loans and are tired of being turned down because of a low FICO score.
Assuming an FHA Insured Loan
There are also options to assume an FHA-insured loan from another person who is already approved. Although there may be similar options in other countries, purchasing FHA government Loans is available only in the US.
What is FHA?
FHA stands for Federal Housing Administration which has been around since the 30’s whereby the US Federal government insures loans for new houses, refinancing existing houses and even for some home repairs. It is part of the Department of Housing and Urban Development’s Office of Housing also known as HUD to guarantee mortgages and loans and reduce lender’s risks especially for individuals who may otherwise be turned down due to bad credit or other factors. It is a very real option for those are seeking a bad credit mortgage alternative.
203(b) FHA Home Loan
Low down payment is an attractive feature of this program and is called the 203(b) FHA home loan. All that is required is a 3% down payment. And for those who may think this program is funded by taxpayers money, it is not. The FHA generates income on its own and is not dependent on taxes or outside revenue sources.
Main FHA Mortgage and Loan Advantages
The main advantages to those who may need a bad credit mortgage is that the credit criteria is not as strict and many who have no credit history at all will be able to get approval, likewise it is possible to take over the mortgage of another person’s FHA loan.
To check if you may qualify for a this FHA guaranteed mortgage program go to the FHA loan limit calculator at the main HUD government website.
