Unless you’re a nomadic gypsy or voluntarily and happily homeless, then you probably appreciate having a roof over your head. Even if you are homeless, you have to try to shied yourself from the elements to some degree, and common ways of doing that for homeless people is sleeping beneath underpasses or fashioning some sturdy cardboard over their heads. Some people are hopeless in this world, or we feel as though they are because we haven’t found a way of being able to help them. But, assuming that you’re not one of these people who I speak of, you may still feel a little hopeless yourself, somewhere on the hopelessness spectrum. That’s okay though, plenty of people feel the way you do, no matter where you are on that spectrum, but no matter who you are or where you’re from, there are ways to become more self-sufficient and take whatever helping hand may be available to you. It’s time to take control of your life right now, starting with your living situation.
Have you been renting forever? Do you still live with your parents? Are you in the process of going to school and want to set yourself up for success when you get out as soon as you can? It doesn’t really matter how you answered any of those questions or if any of them actually apply to you, because if you’re looking to get yourself into a more stable situation in your life, I might have some valuable words for you to hear. If you’ve got a decent job and are generating a steady income, then maybe you ought to start thinking about all of the money that you’ve been tossing away on rent. Maybe you’ve never thought about buying a home, but now is the time to start thinking about it if you’re not planning on traveling the world, or you don’t have any grand plans that are currently in the works. FHA loans make it easier to buy a home than conventional loans, no matter how much you may or may not have saved up for a down payment. Heck, you may find that if you get serious about the idea, someone who cares about you and is in a more financially stable position may even gift you the 3.5% down payment needed for the home you’re looking to buy.
Conventional loans require 10-25% as a down payment, because they’re being backed by the lender who is funding the loan. Non-FHA lenders aren’t into the idea of taking risks that they can avoid, and someone with a less than perfect credit score, job history and/or unfavorable rental past, isn’t worth that risk for most bank lenders. This is especially true if you lack a very large down payment for the home you’re interested in.
I’m sure you’ve heard the expression “Money talks”, and in the financial industry where all they do is talk about money, this is definitely true. The FHA is a government industry that works with mortgage lenders to provide home loans to those who aren’t able to meet the strict qualifications that exist in the home loan-lending market otherwise. If these loans were ever to go into default, they’re ultimately insured by the US government, so the lender isn’t responsible for shouldering the weight of the defaulted loan. That’s the reason why they’re even willing to participate in these lending programs, because of the decreased amount of risk involved with lending to low-medium income people and single families.
It’s not necessarily easy to qualify for a FHA loan, but it’s not near as difficult as it would be otherwise if your only other choice were banks. You need to have a credit score of 580 or higher, show stable job and rental history and then, like I mentioned earlier, come up with 3.5% for a down payment on your home. The FHA does not fund your loan, this important to remember, they just provide an avenue for FHA-approved lenders to help you get into the home-buying game by insuring the loan.
The lender themselves, are able to set their own underwriting rules for these kind of loans and they are referred to as ‘overlays’. It’s important to understand exactly what those overlays are, but it’s more important to just make sure that you’re in the proper state of mind for understanding the commitment involved with buying a house. Living in a country where home loans of this kind are available, is a serious benefit and they wouldn’t be available if the governing body of the country that you reside within wasn’t truly concerned about being able to help you achieve your version of the American dream by way of home ownership.