The ABCs of Getting a Mortgage Loan for First-Timers

Posted on: 20 September 2017

The days of easy lending when it comes to home loans are well past. Previously, you might be able to qualify for a loan just on your say so, with the lender never bothering to verify income or other important points. While these so-called "no doc" loans are over, it is still possible to get a loan if you have some financial issues, if you know where to look. Read on to find out what three big bonus benefits that the Federal Housing Administration (FHA) has in store for applicants:

You can get a loan, even with a low credit score

For a conventional loan, it would be an uphill challenge to gain an approval if your credit score falls below the 750 line. Lucky for you, though, the FHA accepts applicants with scores of only 580, and the best part is that you only need to come up with a down payment of 3.5%. If your score doesn't quite make it to 580, don't despair, the FHA still has a loan for you. If you can get a down payment of at least 10% of the purchase price together, you can qualify for a home loan with a score that is at least 500.

You can get a loan, even with a bankruptcy

Financial woes can lead to a domino effect, and many people are faced with the difficult decision to file for chapter 7 bankruptcy. While most lenders won't consider applicants with past bankruptcies, the FHA takes a more forgiving approach. As long as your bankruptcy is at least two years in the past (from the discharge date, not from the filing date), you may be able to be approved for an FHA loan. Additionally, your credit history in your recent past, since the bankruptcy must show that you learned from your past mistakes and are taking steps to improve your financial savvy. You recent credit history must show no black marks (other than the federal filing).

You can get a loan, even with a foreclosure

Failing to honor a previous home loan can be one of the worst possible black marks against a conventional loan applicant, but the FHA understands that you deserve another chance to prove your worthiness to own a home again. You must wait until at least 3 years have elapsed from your foreclosure, and you must have shown a vast improvement in honoring your more recent debt obligations.

To learn more about FHA loans, contact a company like Team Campshure Walczyk , Resource One Realty, LLC.