FHA home loans are mortgage loans that are insured against default by the Federal Housing Administration (FHA). FHA loans are available for single family and multifamily homes. These home loans allow banks to continuously issue loans without much risk or capital requirements. The FHA doesn't issue loans or set interest rates, it just guarantees against default.

FHA loans allow individuals who may not qualify for a conventional mortgage obtain a loan, especially first time home buyers. These loans offer low minimum down payments, reasonable credit expectations, and flexible income requirements.

In 1934, the Federal Housing Administration (FHA) was established to improve housing standards and to provide an adequate home financing system with mortgage insurance. Now families that may have otherwise been excluded from the housing market could finally buy their dream home.

FHA does not make home loans, it insures a loan; should a homebuyer default, the lender is paid from the insurance fund.

• Buy a house with as little as 3.5% down.
  
• Ideal for the first-time homebuyers unable to make larger down payments.
  
• The right mortgage solution for those who may not qualify for a conventional loan.
  
• Down payment assistance programs can be added to a FHA Loan for additional down payment and/or closing cost savings.
  

Your loan approval depends 100% on the documentation that you provide at the time of application. You will need to give accurate information on:

Employment

• Complete Income Tax Returns for past 2-years
  
• W-2 & 1099 Statements for past 2-years
  
• Pay-Check Stubs for past 2-months
  
• Self-Employed Income Tax Returns and YTD Profit & Loss Statements for past 3-years for self-employed borrowers
  

Savings

• Complete bank statements for all accounts for past 3-months
  
• Recent account statements for retirement, 401k, Mutual Funds, Money Market, Stocks, etc.
  

Credit

• Recent bills & statements indicating account numbers and minimum payments
  
• Landlord's name, address, telephone number, or 12- months cancelled rent checks
  
• Recent utility bills to supplement thin credit
  
• Bankruptcy & Discharge Papers if applicable
  
• 12-months cancelled checks written by someone you co-signed for to get a mortgage, car, or credit card, this indicates that you are not the one making the payments.
  

Personal

• Drivers License
  
• Social Security Card
  
• Any Divorce, Palimony or Alimony or Child Support papers
  
• Green Card or Work Permit if applicable
  
• Any homeownership papers
  

Refinancing or Own Rental Property

• Note & Deed from any Current Loan
  
• Property Tax Bill
  
• Hazard Homeowners Insurance Policy
  
• A Payment Coupon for Current Mortgage
  
• Rental Agreements for a Multi-Unit Property
  

The main difference between a FHA Loan and a Conventional Home Loan is that a FHA loan requires a lower down payment, and the credit qualifying criteria for a borrower is not as strict. This allows those without a credit history, or with minor credit problems to buy a home. FHA requires a reasonable explanation of any derogatory items, but will use common sense credit underwriting. Some borrowers, with extenuating circumstances surrounding bankruptcy discharged 3-years ago, can work around past credit problems. However, conventional financing relies heavily upon credit scoring, a rating given by a credit bureau such as Experian, Trans-Union or Equifax. If your score is below the minimum standard, you may not qualify.