First Time Home Loans for Poor Credit

YES, the Federal Housing Administration still allows first time home buyers with poor credit scores as low as 500 to get approved. New house buying applicants must be able to show the underwriter compensating factors for them to justify making a loan to a first time home buyer with a checkered history.

In the market for first-time home buyer loans, FHA stands head and shoulders over the rest. FHA insures mortgage loans for people with fico scores between 500 and 600, so it is popular with first-time buyers and people with limited or no credit.

When finding out that there are alternative mortgage loan options for people with poor credit, many potential home buyers have questions. Let's take a quick tour through some of the most common questions related to FHA home loans.

1) What Is An FHA Home Loan?
These loans are insured and backed by the Federal Housing Administration, a division of the Department of Housing and Urban Development. It is especially designed for the first-time home buyer who has some credit challenges in his or her past.

2) What Is The FICO Credit Score Required For This Kind Of Loan?
The minimum FICO credit score required for FHA financing is 500. Having a higher score can be beneficial, but it does not impact your interest rate in an FHA first time home buyer loan. The interest rate is determined by the lowest rate the market permits.

3) What If I Do Not Have Any Credit History?
Even if you do not have an established history of using credit cards or other instruments that make up a FICO score, you can still qualify for an FHA loan. The most important aspect of an FHA loan is the income documentation you submit covering the last 24 months.

4) What If I Have Bad Credit Resulting From Bankruptcy Or Foreclosure?
Even if you have a bankruptcy or foreclosure in your history, it may be possible for you to get an FHA home loan. You can usually qualify for an FHA loan after 12 or 24 months from the date your bankruptcy was discharged.

5) What If I Have Large Amounts Of Debt Relative To My Income?
Even if you are carrying a large amount of debt, you will usually still be able to qualify for an FHA home loan. As long as you can demonstrate that you have been steadily employed over the last 24 months, with stable or expanding income, you have the opportunity to qualify.

Everything You Need to Know About First Time Home Loans with FHA in 2014

A recent article revealed that many San Diego residents are looking to buy their first home if they can qualify for an affordable home mortgage. FHA loans make an excellent first home financing option. These loans make home ownership possible to those who have less than perfect credit, as they also offer distinct benefits to those with great credit. One aspect that attracts many first time home buyers across the United States is the low down payment rates often offered by FHA approved lenders on these home loans. The average down payment rate offered when financing a home using one of these loans is around 3.5%, turning what was once an excessive amount into an affordable amount, and allowing first time home buyers to close on their homes faster. Unlike repeat buyers, first time home buyers do not have the benefit of any profit being made from a previous home sale, and saving for a high down payment may take months or even years to achieve. With FHA home loans, first time home buyers have an option that allows them to close on their first home in a timely fashion and for a price they can afford. For over 80 years FHA has been insuring poor credit home loans for first time buyers.

FHA home loan limits will vary depending on the region the home is located, and the state of California has some of the greatest fluctuations in these home loan limit rates. The limits placed on home loans by the FHA are often created using the average income levels and selling prices on homes throughout a given area, allowing these loan limits to be kept fair to borrowers and lenders. In the county of San Diego, this rate is placed at $400,000 for the year 2014, allowing those looking to purchase a first home within the county quite a few options in terms of finding the home of their choice. This $400,000 limit will cover many very suitable residences across the county of San Diego, and allow first time prospective home buyers to find a home that they are truly happy with and give them the opportunity to take advantage of financing their first new home through a FHA home loan.

While these 1st time house loans are very beneficial, it is important to take note that these housing loan limits are subject to change from year to year along with the state of the economy and housing market.