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A Federal home loan is best home loan as it is government sourced.
Federal home loan
FHA offers the most popular programs among home buyers. This is mainly because of the low down payment and easy qualifying criteria's. FHA, which stands for Federal Housing Administration, is a governments backed loan. Most people are not aware that FHA does provide loans too. Instead, the loan which your lender provides to you, will be backed up and insured by FHA.
In other words, if you default on your loan, your lender will be covered by FHA insurance funding. This represents the main reason why it's easier to qualify for the FHA Loan Program for FEDERAL borrowers. Normally the only criteria's that a lender will request in order to qualify for the federal home loan program include:
1. All past collections should be paid off upon submission of loan application.
2. Credit Score. A credit score above 575, which is poor but moderate credit. Also, they will expect you not to have any derogatory accounts on your credit report.
3. Good and stable employment history of federal borrower. You will need at the least two years at your current position and or two years of employment history in the same line of work.
4. Down payment. You need funding to pay for closing cost and down payment cost.
The closing cost normally range from 2-3% of home value and the down payment averages around 3% or more of the home value. There are FHA programs that offer
zero down loans. The amount your lender will lend to you depends on income and the amount of current debt of the federal borrower. FHA figures federal amount based on monthly income and total debt combined with future mortgage expenses of the federal borrower. They request that all of debt of FEDERAL borrower not exceed 45% of his monthly income.
This amount includes PITI (principal, interest, tax, and insurance. For example: If gross monthly income of the federal borrower is 4500.00, his monthly mortgage and debts can not exceed 2025.00. If federal borrower's current debt averages 1000.00, he will only qualify for a monthly mortgage not to exceed 1025.00 including PITI. Most lenders are strict with this criterion and will ask to see two years of W2's and six months to a year of pay stubs; in order to verify his monthly income is stable and does not fluctuate per month. To get the best benefits of the FHA loan program find a lender that is most compatible with your current financial and credit situation. A great, low interest mortgage rate can be found, if you know where to look.
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