FHA Loans

What You Should Know About FHA Loans

Introduction to FHA Loans

FHA Loans are mortgages specifically for use in the purchase of a home. A loan program specifically for the United States, these loans can only be taken advantage of by qualifying individuals. These individuals typically have to fall within a certain income bracket, as the purpose of an FHA loan is to facilitate home ownership for individuals who may not have the available resources to purchase a home on their own accord. For this reason, a FHA loan is considered an excellent program for those individuals who qualify, since it allows them other options instead of renting.

Who is the FHA?

The FHA is the Federal Housing Administration. This is a Federal administration that is run by the Federal government and is specific to the United States. The history of the Federal Housing Administration is widely varied and dates back to the 1930s when the nation was under the grip of a crippling depression. As the Depression raged all over the country, interest rates skyrocketed to the point that individuals were unable to find housing and even forced out of their homes due to foreclosure on the property. For this reason, the Federal Housing Administration was formed and the loans were subsidized by the Federal government.

How to Get a FHA Loan

When it comes to successfully receiving a FHA loan, you will need to do the appropriate research in order to determine if a FHA loan is the right type of home loan for your specific financial situation. For this reason, consider contacting the FHA directly in order to get the most information on the administration and their lending programs. The Federal Housing Administration's website is a fantastic source of information regarding the program and the loans available. After you learn about the loan and lending program, your next step should be to take a good, hard look at your financial income.

One major aspect of any type of loan is the debt to income ratio. This ratio is quite simple to compute and directly compares the amount of money coming into your bank account with the amount of money that is going out and is owed in outstanding debts or loans. Consider all sorts of debts and loans in this equation, including student loans, vehicle loans, and credit card debt. In order to put your financial information is the best possible light; you should consider your debt before you apply for a loan. It may be the case that you need to consider debt recovery before you apply for any type of loan, but especially a FHA loan.

FHA and the PMI

PMI is known as Private Mortgage Insurance and is private companies that offer loans for housing. These companies allow there to be a wide variation in the offers for mortgages, but may require that there be a certain amount of income in order to receive a loan. For this reason, FHA loans are specifically geared towards individuals who do not have the appropriate sources in order to qualify for a PMI loan.