What is an FHA loan and do I qualify?
In 1934, Congress established the federal housing administration. This agency built the foundation for more affordable loans, enabling many Americans to buy a home with little money down and low interest rates. The government insures lenders against borrower default on FHA loans, which reduces the risk to lenders and allows them to offer lower interest rates. Additionally, the FHA has set fairly liberal underwriting guidelines that make FHA loans available to a large group of people. This high demand also helps keep the interest rates low.
If you are looking to buy a home with little money down, an FHA loan may me right for you. To help you know if you could qualify for this type of loan, consider the following guidelines:
Income Qualifications
The past two years of complete income tax returns with schedules and W-2s as well as the past two months of pay stubs are used to establish your income. Your monthly gross income (before taxes) is used to determine the loan amount you can qualify for.
Your housing ratio should not exceed 29% of your monthly gross income. This means that the amount you pay each month...
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