By Lendermark.com

Are you exploring the possibility of buying a home and wondering about whether those FHA loans are right for you? These loans can indeed be an excellent choice for many individuals. They are an ideal option for a first time home buyer to consider, especially if they do not meet the qualifications for some of the other home loan programs.

An FHA loan is a form of financing that is backed by the Federal Housing Administration. Under the terms of the program, the lender is guaranteed to receive repayment of the borrowed money in the event that the borrower happened to default on the loan. We do not want to see that occur so we work diligently to ensure that the borrower is placed in a loan that will be affordable, even if things get a little rocky in the future.

Although FHA packages are typically the financing option that many associate with a first time home buyer, these loans can be used by others as well. There are some specific requirements that must be met before approval will be granted. In order to receive one of these federally backed home loans the borrower must not have purchased any home in the previous 3 years. Borrowers must also have no outstanding mortgages from another lender. However, if a borrower has purchased an FHA loan within the past three years, they could obtain a new FHA if that are selling their existing home or are moving to a different state.

The FHA loan programs were first begun during the 1930s when the effects of the Great Depression were impacting the country and interest rates were high. The funds were made available to help encourage home ownership for working class Americans. Today it remains a viable home loan program that is structured to make payments easier for people who want to realize the dream of owning a home.

The FHA qualification process makes getting a home mortgage easier for a first time home buyer who may have less than perfect credit and even those with no credit may qualify. People who have not established a long work history and those who cannot come up with the money for a substantial down payment can also benefit from FHA loans.

Applicants for FHA loans are required to make a down payment of at least 3.5%. They can even make this down payment with money that they have received as a "gift". This practice of gifting money for the purpose of a down payment is not something that most lending institutions would allow, even for a first time home buyer.

Applicants with a credit score that is as low as 620 to 640 can easily qualify for an FHA loan. This same score makes it difficult to obtain a traditional mortgage loan. In fact, most lenders want the credit score to be 750, or higher. Even if your FICO scores are below 620, we will work with you to quickly rebuild your credit so that you can qualify for an FHA home loan.

These loans are a viable option for people who have had past financial difficulties, such as a bankruptcy or a foreclosure. In these cases, a loan counselor looks for a good credit history during the two to three years following these major setbacks. With traditional lending institutions, this same scenario may require as many as seven to ten years of good credit and payment history before being approved for a loan.

Recent college graduates can also be approved for FHA loans if their current employment is directly associated to their field of study. While these financial packages are the best option for some first-time home buyers, they may not be the right choice for everyone.

FHA loans usually have fewer options concerning the repayment schedule. For instance, a home buyer may only be offered a thirty-year repayment schedule as part of the loan package. Also, some borrowers might realize that the loan amounts may not be large enough to cover the home mortgage they are seeking.

These loans are government-backed and they were always intended to help individuals who have experienced some financial difficulties. For these reasons, the amount of money that can be borrowed is federally regulated. If you are a first time home buyer, you should still take the time to explore FHA program and determine whether it might be your best financing option.