I have had many come to me put off by how difficult it is to buy a home if you have bad credit. I have always encouraged people with bad credit to look into an FHA home loan before they give up on the possibility of owning a home.
FHA Home Loan Perfect for Those With Bad Credit
- You can qualify with a lower credit score
- You can use a gift as a down payment as well as other flexible down payment options
- They are creative in proving credit when you don't have any or very little
Some of the reasons why people should seek out an FHA loan is when you may have some collections against your credit. Perhaps you have filed for bankruptcy or you have a mediocre credit score. They are especially good if you don't have money for a down payment or need help with closing costs.
Why can FHA do this?
Remember FHA is not the lender. They are the insurer. In other words, they insure the loan to the lender. Thus the loan monies are guaranteed. So the lender is willing to take a risk on you because FHA guarantees they will get their money. It's better than having a co-signer.
Although there is a cost for this guarantee. You have to pay mortgage insurance on your loan. Some might get upset with paying mortgage insurance, but for those of you who really want to buy a home and do not want to wait, it is possible.
Choose an FHA Lender
Since FHA insures the loan, they have some requirements the home may have to measure up to before they will insure it. Some real estate agents or loan officers don't want to work with those requirements, so they try to steer you away from any FHA loan products. That is why the search for a loan officer who is familiar with the FHA loan products is so hard to find.
But don't let that stop you. Be persistent in your search and find a loan officer who has closed several FHA loans to help you. Usually, a national bank will have loan officers who can work with these products.
There are many people who have seen their dream of owning their own home become a reality by qualifying for an FHA home loan. These mortgages are the best for the first time home buyer and those who need a bad credit FHA home loan. So its worth your while to see what you are eligible for.
My first home was an FHA home mortgage. I was really happy with their requirements for the home because there were some problems with the home that I hadn't caught. Of course I was very young (like 20 years old) and wasn't familiar with what problems to look for. FHA caught the problems and required the seller to fix them. That was my first home!
Even if the seller doesn't want to pay to fix the problems, there is an FHA product that will work with that problems as well. So if you are a first time home buyer, the FHA mortgage is your best choice!
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