Can a FHA Loan Help Buy My New Pennsylvania Home?

By Richard Barrington
Local Lender Columnist
Oct 31, 2007
Shopping for the perfect Pennsylvania home takes time. You look at many houses and consider all the factors. So shopping for a new home loan shouldn't be any different.

Mortgage Options: The FHA Home Loan

First of all, the Federal Housing Authority (FHA) is not a mortgage lender. When you consider an FHA loan for your new Pennsylvania home you're actually considering a loan that will be insured by the FHA, but is still offered by a regular mortgage lender. The advantage to an FHA loan is that the FHA is backing it. This means your mortgage lender might originate a new home loan it wouldn't otherwise offer, whether because of credit risk or other factors. If a buyer defaults on an FHA home, the U.S. Department of Housing and Urban Development (HUD) takes possession of the home. This is a big plus for mortgage lenders because the foreclosure process costs them money.

Qualifying for an FHA New Home Loan

The qualifying criteria for an FHA loan are a tad more generous than those of a conventional loan. Here are some of the highlights for qualifying:

• Your credit score isn't considered. Each borrower is looked at individually.
• Your actual credit is looked at, but mitigating factors such as an illness or job loss are taken into account as well.
• Bad credit or bankruptcy doesn't automatically preclude you from getting a loan.
• Property must be owner occupied -- no investment properties.
• Usually only a 3 percent down payment is required.
• Two years in the same line of work and income must be verified.

For all of you Pennsylvania home shoppers with less than perfect credit, an FHA mortgage could be the right answer for your new home loan. If you think you meet these qualifications, your next step should be to speak with a mortgage lender. Indicate your interest in an FHA program -- if that lender doesn't offer FHA loans check with one that does.

Source
FHA

About the Author
Richard Barrington is a freelance writer and novelist who previously spent over twenty years as an investment industry executive.