FHA Loan Requirements - What is FHA Loan

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The current events seem to tell us that this is not the right time for us to get a loan to build our dream home. But that should not be the case. We should not be discouraged as long as we have been properly informed with our choices and our options on where to get our loans. To help you with your discernment, let me tell and compare you on two of the most commonly known loans that are being used: conventional loans vs. FHA loans.

For the past few years, most people are leaving out conventional loans vs. FHA loans. FHA is a lot more popular than the latter. But why is that? Let us enumerate the differences between the two.

Conventional loans are usually given by private lenders such as banks or mortgage companies. But such loans are usually imposed high interest rates by these companies. But to enable these companies to lend loans to home owners and buyers at much affordable rates, the US government created the Fannie Mae and Freddie Mac. These are called GSE or government sponsored enterprises and are funded with federal money that they would be lending to these private institutions to ensure stability and liquidity in the mortgage and housing market.

The guidelines of conventional loans vs. FHA loans are a lot stricter. FHA would only require the borrower to pay a 3.5% minimum down payment whereas private lenders giving out conventional loans require a borrower to pay a minimum down payment ranging from 5 to 10 percent.
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From all the available home financing loans available in the market today, the easiest one to comply all the requirements with is the FHA loan restriction. These loans are insured by the Federal Housing Administration of FHA to help most Americans that belong to the lower income brackets who cannot qualify for conventional home loans. Now, because of the current credit crunch, the FHA had announced a lot of changes that would really help millions of Americans had been badly hit by the housing crisis and the worst recession this country had seen in the past few decades.

One good thing on the FHA loan restriction for income is that they don’t require you to have a minimum income for obtaining a loan. But it is important to keep in mind that you must be able to prove that you have a steady and stable source of income for the past three years.

Some of the allowable income sources that you can determine would be Social Security income, retirement pension payments, child support and even unemployment compensation! It could also come from a part-time job or from quarterly or yearly bonuses that you receive as long as it is sufficient and are steady.

They will also require you to present your billing statements, whether on utilities like electricity or credit cards, so it is a must that you had been able to pay these bills on time.
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With the gloomy picture of our economy today, including the housing and mortgage markets, there is still one bright star that is becoming a lot more popular than ever for those who are still keen on having their dream home: FHA mortgage loan.

FHA mortgage loan is a mortgage loan introduced in the United States in the years of Great Depression that is insured by the Federal Housing Administration. In the past, this loan is often the last resort for borrowers whose applications had been rejected by private lenders offering conventional loans.

A lot of private lending corporations usually help borrowers to apply for a FHA loan. The good news is that just before the credit crunch finally took a hard blow at the housing market, mortgage limits for FHA mortgage loans had been increased at the start of 2008.

Despite being the so-called ‘poor man’s loan’ in the past few years, FHA loans had been generally popular among borrowers but the problem is that it isn’t available for everyone. FHA mortgage loan can only be availed by those coming from the low income brackets. These people usually would not qualify for a conventional home loan financing.
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The right to owning and having a home is instilled within everyone. Every single person in every nook and corner of the whole wide world deserves a place that he or she can call home. To the high-income owners and for those born with overflowing and awe-inspiring wealth and money, owning a home is just as easy as learning the alphabet but how about the less fortunate? How about those people who find it hard to find enough and sufficient money for them to be able to land a house? They need something that would help them alleviate that problem and that solution would be through the utilization of the fha loan process…

These fha loans cater to the needs of the less fortunate and low-income earners to have and acquire a house that they could call their home sweet home. Basically, these fha loans help their low-income borrowers by giving the house a lower and more affordable price and selling rate. This is wonderful because not everybody can afford an expensive house. This also helps encourage more people who have no work to be employed as engineers and construction workers. It also helps in increasing the country’s overall revenue gained by the building of more houses.
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