How Do FHA Loans Work?
As stated above, the FHA does not provide loans; it insures loans. The insurance minimizes the default risk that lenders face when borrowers put down less than 20% towards a purchase. FHA authorized lenders to approve borrowers that have a less-than-perfect credit score and as little as 3.5% to put down on the loan. Although FHA mortgage loans were designed for serving low-and-moderate-income home buyers that would have otherwise not qualified easily for a conventional loan, anyone can apply for one.
Also, FHA approved lenders can do the following actions without any further approval from the FHA:
- Take the loan applications
- Process the loan applications
- Underwrite and close the loans
Who can qualify for an FHA loan?
First time home buyers, repeat home buyers, and current homeowners looking to re-finance - anyone that can meet the requirements of this program can get an FHA loan. You should be able to prove that:
Your monthly loan payment will be less than 31% of your total monthly income.
Note: Please understand that your monthly loan payment will include your Principal, Interest, Taxes, and Insurance (or PITI), and also monthly mortgage insurance.
You have a clean credit history showing that you maintain and timely pay off debts.
You are a legal resident of the US.
Your lender may have some additional requirements which apply to you, your down payment and the house you are purchasing, so make sure to ask.
Want to learn more about the FHA loan program?
Contact My Liberty Loans and find out how to qualify. Call (561) 799-4015 or visit https://www.mylibertyloans.com/ to book your appointment. If you want to get an FHA loan to buy a house in West Palm Beach, FL, they can offer you the best mortgage quote.