Federal Housing Administration mortgage loan just insures the mortgage loan rather than lending money for mortgages. Even a people with bad credit can qualify for FHA mortgage loan. The interest rates are also not too high in these loans as it is normally guaranteed by the government. Once you manage to qualify for an FHA mortgage, commercial mortgage lender will give you the loan.
In order to qualify for an FHA mortgage loan, it is quite mandatory that you apply through Federal Housing Administration. When you apply for the loan, Federal Housing Administration will evaluate your credit record. You will only be able to qualify for this loan when your credit report is up to the mark for last one year.
Before approving your loan application, FHA will take into consideration your mortgage and rental repayment history. In some cases, FHA will also take a closer look at your debt-to-income ratio. The main advantage of going though FHA mortgage loan procedure is that you get a chance to improve your credit situation especially if there is something wrong with it.
For example, if there is some problem with your credit report and you are not responsible for it, FHA is going to assist you in overcoming those issues.
When applying for FHA mortgage loan, you have to make a down payment on the mortgage. Generally speaking, this down payment amount is in the range of three percent of the loan amount. Down payment can come through wide array of sources. It includes, government programs and non-profits. Your family members can also play a prominent part in giving you the money for down payment purpose.
There are limits associated with FHA mortgage loan. You can only get limited amount of money on the basis of state you live. If you are not happy with the amount of money you have qualified for, you should go for a second mortgage.
You have to buy FHA insurance on the mortgage if you want to qualify for a FHA mortgage loan. This insurance can be included in your monthly mortgage installment.