If you need to obtain necessary financing for the purchase of a home it is important for you to know that there are alternative lending sources other than banks and traditional lenders that you can use for a mortgage, even if your credit or other circumstances are less than ideal. There are government sponsored programs that allow a variety of people wit different backgrounds to purchase a home with a low or no down payment and affordable interest rate. FHA purchase financing is an option many people who are involved in the buying process.
FHA purchase financing is financing insured by the Federal Housing Administration which is a government owned organization that works to extend mortgages to people who do not meet traditional lending criteria. The FHA was established under the National Housing Act, with their goal being to extend financing to people with repayment abilities who otherwise lack the ability to get a traditional loan. The FHA does not provide the finances necessary to fund a loan, however, they insure the loans of those buyers who use their programs allowing lenders who would not otherwise be able to extend them financing to give buyers a loan.
Because the FHA insures loans against default, they have opened up the prospect of homeownership for people who had previously been unable to get a loan. First time homebuyers, minority borrowers, buyers with a poor credit history or a lack of credit, and prospective homebuyers who do not have a lot of money for a down payment or closing costs can purchase a home because of FHA purchase financing.
FHA mortgages have many benefits. The major benefits to FHA mortgages are that they require a low down payment, usually 3% of the home’s purchase price which is much lower than the conventional 10 to 20%, closing costs can be included in the loan, credit requirements are much lower than with traditional loans, and other requirements such as cash reserves may not have to be met like with traditional lenders.
If you are trying to purchase a home and have had trouble attaining financing you should speak with a FHA approved mortgage broker. They will be able to tell you the details of FHA purchase financing and what qualifications you will have to meet in order to get financing. FHA approved mortgage brokers can help you navigate the process of home buying and find a loan that is compatible for your unique situation.
