My cousin Alison has dreamed about buying her own home for quite some time. As a first time homebuyer she did not have much knowledge on the various types and sources of home loans that she could apply for. Alison was also a bit worried that she might not qualify for a home loan from major banks because of her limited income and also that she probably would not have enough in her savings account to pay for the down payment as required by many banks. So Alison considered applying for a Federal Housing Authority loan that was designed to make buying homes easier for first time buyers. However, she needed to ensure that she fulfils all FHA requirements in order to be eligible for the loan.

Generally, FHA loans are not given directly to the borrowers by the FHA but borrowers may receive the funds from lenders that are approved by the FHA. Due to the more lenient and flexible FHA requirements, FHA normally guarantees the loan. With this feature, Alison was sure that her loan application would be easily approved. However, she was surprised to learn that different lending institutions might offer her similar mortgage options or could even turn her down because the guidelines do not necessarily change based on who she would borrow the money from. The eligibility criteria required by FHA may be more flexible than conventional loans offered by many banks and financial institutions as they base their approval on the big picture rather than crossing off an applicant because of one single unmet criterion.

Alison met up with a loan officer from a local bank that offered FHA loans to their customers to inquire whether she would qualify for a FHA mortgage. The first thing they asked was her job history. FHA required their applicants to have had at least two years of steady employment, preferably with the same employer to qualify for their home loan. At the same time, it would be preferred if the income of the past two years were increasing or at least remained the same. Alison was already working for the same employer for four years before she decided to buy a home. The firm she was working with implemented the policy of annual increment so her salary was increasing every year. So she definitely fulfilled that particular requirement.

Alison also needed to make sure that the home she wished to purchase also would also qualify for the FHA home loan. So she checked the price of the home and compared it to the FHA limits in her region. She was very happy to see that the home she chose was covered under the FHA qualifying criteria. It was a relatively small home and she intended to live in that house for as long as she could so the bank would have no problem approving FHA application. The bank’s loan officer then checked her credit history to see if there was anything on record that could prevent her from qualifying for a FHA mortgage. Alison had debts but she was also a good paymaster and always did her best to pay her bills and debts on time. Her credit score was not perfect but it was decent. She also had no record of bankruptcy or delinquent debts so she definitely qualified for a FHA mortgage.

Alison finally bought her first home with the assistance of the FHA-backed home loan she took out. After putting down a 5% down payment and signing her loan agreement, she became the owner of a small but comfortable home. She was very happy as she had finally been able to have an asset to her name. She was also very grateful that there were home loans designed to help first time buyers like her.

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Category: Finances
Keywords: fha requirements, fha loans, fha home loan