How To Qualify For FHA Mortgages

2007-03-08 10:33:40

( Financial )



FHA (Federal Housing Administration) mortgages does not provide money for mortgage loans; instead it guarantees mortgage loan applications. Approved FHA mortgages are normally passed on to an accredited commercial mortgage lender who will issue you the mortgage as an interest rate loan. The interest that is offered is usually much lower than a standard mortgage loan because the government guarantees the mortgage.

Similar to a bank loan, or an interest rate loan, the FHA looks at certain factors before granting guarantees for FHA mortgages. The FHA will look for a good credit history of making timely payments on your property leases and any loans for a specific time period. The FHA will also review the amount of money that you owe to your creditors versus your salary (also known as debt-to-income ratio).

A small down payment needs to be paid in cash, without obtaining a separate financing plan from a loan provider. The down payment is based on a certain percentage of your desired mortgage loan amount. In addition, you will need to obtain FHA mortgage insurance for your mortgage loan. The payment for the FHA mortgage insurance is paid at the time you sign your mortgage loan agreement, and every year thereafter until the debt ratio of your property reaches a certain percentage. FHA insurance premiums are based on a certain percentage of your mortgage loan, and can be added to your monthly payments.

For individuals with poor credit history, the FHA gives you the chance to provide reasons for the late payments. The interest rates that will be given by the FHA for people with bad credit history is lower compared to interest rates for private subprime loans. You can only qualify for FHA mortgages after a certain time period if any records of foreclosures or bankruptcies appear on your credit history.

FHA mortgages will guarantee mortgage loans up to a certain amount, and this limit will depend on the state where you live. You will need to apply for a second mortgage through a private mortgage lender should the guaranteed mortgage amount not be sufficient to cover your needs.


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