Not too long ago, loan applicants needed little to no documentation to be approved for a home loan. Things are quite a bit different now, and most lenders require applicants to have stellar credit and a healthy down-payment at the ready. While it may be tougher to be approved for a conventional loan, the Federal Housing Administration (FHA) offers hope for those with credit and cash woes. Read on to learn more about what's great about FHA loans when you're looking to buy a property.
Is a Foreclosure Keeping You Out of Home Ownership?
While credit problems can generally wreak havoc on the dream of homeownership, those with foreclosures in their past may have an even harder time. It can be challenging to convince a lender to give you another chance after you failed to abide by your previous mortgage. Fortunately, the FHA is willing to overlook your foreclosure as long as enough time has passed, and you have made positive strides in improving your credit situation. In as little as three years after a foreclosure, you are eligible for FHA loan approval. The time since your foreclosure is only one-half of the issue – you must also show that your use of credit more recently has made a complete turnaround.
Are You Burdened by a Past Bankruptcy?
A bankruptcy is somewhat more serious than just a credit ding. These federal filings stay on your credit report for several years, and the presence of this record sends a negative signal to conventional lenders. The FHA, however, recognizes that financial issues should not haunt home loan applicants forever. As long as it has been at least two years from your chapter 7 bankruptcy date, you might qualify for a mortgage.
Has Your Credit Score Seen Better Days?
Conventional lenders have high credit score expectations when it comes to home mortgages. Often, buyers are encouraged to have scores in excess of 750 – a number that may be unobtainable for some applicants. Luckily, the FHA has far lower credit score requirements for their guarantee program. If you have a score of at least 580 and can come up with a 3.5% down payment, you could be approved for a loan. Even if your credit score is less than 580, if it's above 500 you can still be approved if you can pay a 10% down payment.
Get started on your quest to be approved for an FHA loan by contacting a real estate agent and finding the home of your dreams today.
Share12 November 2018
I have never been one of those people who loves to shop, which is probably one of the reasons I had such a difficult time choosing a house. I wanted to find the perfect little place for my family to grow up, but that was easier said than done. I knew that I wanted to work with a professional who could really grasp my vision and put me in a place that I would love, so I started focusing on finding the right professional. After a brief search, I was able to find a team of real estate brokers that I knew would do a great job. This blog is all about choosing the best real estate agent for your personality.
