The Truth About Fha Loan Requirements
The Truth About FHA Loan Requirements
The idea that FHA loans are for those with bad credit is simply not true. FHA loan requirements state that credit must be good, and no recent derogatory credit. Its important to know what the FHA loan requirements are before you being the process and apply for an FHA loan. Banks want to know that you have the ability to repay your loan, so if your credit isnt what they are looking for, they will move to looking at any assets you have.
If you have no credit, and you arent sure where to start, you can become a co-applicant on an account, or in other words be added to someones account who has established credit. While I dont encourage making a habit out of this, it can help you get something on your credit history. There is risk in this, as anything could happen at any time, an no one is exempt from job loss or hard times. Being a primary applicant you cant remove yourself since you originally applied for the account in your name, but you can always be removed as a co-applicant or secondary borrower on a credit card. Remember, just paying your bills on time is not the only way to keep your credit healthy. You can also drive your credit score down by maxing out your lines of credit.
Once you are able to get some credit, you will able to move toward paving the way to your fulfillment of the FHA loan requirements. The guidelines are always subject to change, and they have become a little more stringent than they were a few years ago, so keeping up with the knowledge of the market is always essential as well. Avoid the mistakes that can affect your buying power for years to come. Making bad credit decisions can limit your options, so think of credit as a tool, not a joke.
Your credit score will also need to meet the FHA loan requirements if you want to buy a home. If you are a first-time homebuyer then you will need to plan on how you much money you can bring as a down payment. With a credit score of 620 or better, you can start with as little as 3.5% down, but if your score is 580 or better you will need to come up with at least 10% down. This was a fairly recent change, but rightfully so. The idea behind this change was to get the homeowner to invest more into the home upfront. Statistics show that those who put more down on the home are less likely to default on their loan.
Your credit score is a picture of your creditworthiness and is accessed by the lender to determine your creditworthiness. Believe me, banks and lenders what you to be able to meet the FHA loan requirements so that they can make loans for you. When they dont have loans to close, they arent making money. They also have to look at things from a business standpoint, and their guidelines help to put everything in perspective.
For more information on the FHA loan requirements, and a place where you can get direction on improving your credit, just go to www.fhaloansnow.net.
by: Mayer Dallal
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