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Facts You Need To Know About FHA Loans for Bad Credit

by Joan Gallardo Clear Lending Home loans for bad credit

“Here in this write-up, we take a look at some of the facts that one needs to know regarding FHA Loans for bad credit and how to avail them.“

If you are planning to buy a home, FHA (Federal Housing Administration) loan is surely one of your best borrowing options. This loan program is targeted towards offering people with low-income mortgage at highly attractive interest rates. While there are several borrowing options available in the market when you talk to lending agencies such as Clear Lending (https://www.clearlending.com), they are most likely to suggest you the FHA program. In fact, it is one of those loans that people with poor credit score can avail. And FHA Loans for bad credit score has helped millions of Americans turn their dream of owning a home into reality. But before you plan to apply for this home loan program, it is worth knowing some important facts. Read on to know more.

  • Debt To Income Ratio – When it comes to debt to income ratio, FHA home loan is your best option as it allows people with low-income avail loans more easily than any other type of loan. In other words, you will be able to avail this loan with debt to income ratio that makes it impossible to seek loans from elsewhere. The maximum permissible debt to income ratio on FHA loans stands at 43% which includes all the debt that you carry including credit cards, student loans etc.

  • FHA Isn’t a Lender – Though the loan is known as FHA loan, Federal Housing Administration isn’t really the lender. As a government agency, it merely facilitates the loans. It doesn’t mortgage the money to the customers but insures it with the banks and other lenders and would bear a portion of their losses if the borrower defaults on the loan repayment. This is one of the reasons why lenders are less stringent towards these loans compared to others.

  • Credit Score – If you have a credit score of 580 or above, you would be able to buy yourself a house by merely paying 3.5% as down payment. People who have credit scores from 530 to 579 are required to pay 10% as down payment for these loans. Not having credit history isn’t bad either, as in such a case you will be eligible for loans at 3.5% down payment. While people with credit scores below 530 aren’t eligible for these loans, there are cases when special concessions are offered to make them eligible.

  • Down Payment Source – Most other loan programs are strict in terms of the source of down payment. In fact, not adhering to the laws can immediately invite trouble from the tax authorities. FHA loans are more lenient and let you explore more options for down payment that other types of loans.  A gift from a friend or someone in the family can go towards down payment which isn’t the case with other home loan programs.

When you keep these facts in mind, you will be able to understand your eligibility for FHA loans for bad credit before applying for it. Lending specialists such as Clear Lending (https://www.clearlending.com) help you avail these loans at the most competitive interest rates and guide you through the entire process of availing these loans.

About Author: Joan Gallardo with his 18+ years of experience as Senior Loan Officer is a wealth of knowledge, dealing with FHA loans for bad credit scores. He regularly publishes blogs and articles surrounding different areas of borrowing including VA loans for bad credit in Houston


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About Joan Gallardo Junior   Clear Lending Home loans for bad credit

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Joined APSense since, February 24th, 2017, From Houston, United States.

Created on Nov 15th 2017 00:39. Viewed 301 times.

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