Due to the impact of global financial crisis, mortgage has become the only medium for people to afford to buy homes. But again, the most popular market for lending money is facing liquidity troubles so they have made the application procedure for home loans more arduous. So, if you are seeking a way to apply for a mortgage, you have to meet the eligibility criteria to get mentioned credits:
Must Down Payments
Private Mortgage Insurance
If the first two points, that is the debt-income ratio if not greater than 28 % of your gross income, and the debt-credit ratio determined by the usage of credit card if less than 25% or 30 %, then you will logically have a good FICO score. However, if this score does not met and if the asked down payment price is less than 20 %, you will end up opting for private mortgage insurance.
How FHA Loans can help
In short, if all the above parameters are not met, you might not be able to afford a home mortgage. But when there are worries, there is a definite solution to bring them to an end. In this case, you need a lender who can offer you mortgage even if the mentioned credits are not met. A Federal Housing Administration loan can be of great aid for people who want to purchase homes but earn very low to moderate incomes.
FHA loans are very popular among property buyers due to fewer requirements:
Meet the criteria with Ease
You can prove your financial stability by showing salary slips or salary statements of minimum 2 years. This will help the lender know that you are earning a definite amount.
Bare Minimum Credit Score
When it comes to FHA loans, you do not need to have an excellent credit like the traditional loans, where everything from your income to foreclosures is verified and the loan approval entirely depends on the obtained FICO score. But thats not with FHA loans, as you just need to have a credit score of at least 620 or more and few delayed payments of past two years. In addition to this, if you prove that the foreclosures or the bankruptcy was due to outside economic factors that lessened their earnings by 20 % continual for just 6 months can easily get home loan with FHA support.
Least Down Payments
Liquid assets have become of much importance in the last couple years. When it comes about liquidity, very less people are there who stick to a great amount of cash. Then, what about those people who do not have a large cash reserve so they can afford to buy homes. Down payments are must part of loan procedure, producing 20 to 30 % liquid cash is not an easy task. If you are under the same tragedy, then FHA loans are your life saver providing you an exemption of 3.5 % down payment and thus no need of the private mortgage insurance. FHA loans can help you to afford your dream dwelling.
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