FHA Loans –Draft, Needs Grammar Check

The FHA, or Federal Housing Authority, is a federal government agency that was created in the 1930’s. The US was just beginning to rebound from the Great Depression and the FHA was developed to help add stability to the mortgage market and improve housing conditions. In 1965 the FHA was joined with the Department of Housing and Urban Development (HUD) and together they have insured of 34 million mortgages.

Typically an FHA does not rely on a persons credit score as much as a traditional loan and they also do not require as much of a down payment, currently only 3%. Since the interest rate is not dependent on a credit score, the rate is the same for everyone. This is advantageous to someone with a lower credit score, but does not reward someone with a high credit score.

In order to qualify for an FHA loan there are several requirements you must meet. You must been employed by the same company for at least two years and maintained the same or more income throughout your employment with the company. If you have ever had a Bankruptcy, it must be at least two years old and you must have had at least two years of good credit since the bankruptcy. If you have had a Foreclosure, it must be at least three years old. You must also be in good standing with any of your lenders and not had more than two 30 day late payments in the past two years. Your mortgage payment will usually be based off of 30% of your total monthly income.

FHA loans were extremely popular in the late 30’s and early 40’s, but today it is estimated that they only account for 3% of all current home loans. If you have less than perfect credit, they may however be a great way for you to get a loan.