How to Qualify for an FHA Loan with Poor Credit

Because the government insures FHA loans, it is often easier to qualify for an FHA loan than a conventional loan. This means that even consumers with less than perfect credit may qualify for an FHA home loan. There are even programs provided by the FHA intended to help homeowners avoid foreclosure, in times of financial difficulty.

Requirements for Loan

Applicants must be legal U.S. residents, with valid Social Security numbers. They must also be of legal age in their home state. Income, debts, assets and credit history will be taken into consideration during the application process, to qualify for an FHA loan. While no minimum credit score is specified by the FHA, an applicant’s credit score is still taken into consideration.

Who this Loan Suits Best

First time homebuyers are good candidates to qualify for an FHA loan. With smaller down payments, and lower interest rates than conventional mortgages, FHA loans are often an economical choice for those new to the housing market. Borrowers with limited access to funds for a down payment may do well to apply for an FHA loan, which requires only 3.5 percent down payment. This down payment may be paid by the borrower, or can be a gift from another person.