Federal Housing Administration, or FHA home loan mortgages are ideal for those buying a home for the first time. In order to increase the number of American homeowners, the government created the FHA and the loans it offers.

Unlike other Fannie Mae and Freddie Mac loan programs, the FHA loan is less stringent in its approval requirements, allowing for an easier qualification process.

Generally speaking, if you are have a job and have acceptable credit for the past 12 months, you have a good shot at qualifying for a FHA home loan.

FHA Home Loan Advantages

Low Down Payment and Closing Costs - Having enough money for closing costs and a down payment is a major hindrance for many people trying to buy a home. FHA loans can diminish or eliminate many of the restrictive costs of new home purchase.

• The required down payment is less than 3% of the sales price
• There are some 100% financing options
• A gift from a family member can cover all your down payment and closing costs
• A maximum of 6% of the sales price can go towards your closing costs and down payment if the seller chooses to give you such credit. If you get this option, you still have to show that you have the required down payment money in the bank or as a gift

Qualifying for Credit is Easier – A sticking point to getting a regular Freddie Mac or Fannie Mae mortgage could be any type of unfavorable credit within the past 2 years. Sometimes people have temporary credit issues, and the FHA understands that such credit events should not keep you from owning a home. The FHA has the following flexible credit guidelines.

• In order to qualify, most FHA lenders require FICO scores of 620 or more
• Even if you do not have a credit score, you can still qualify if you have other credit such as phone, utility or cable bills and can produce credit history with cancelled checks or printouts
• You can qualify for an FHA mortgage 2 years after your Chapter 7 Bankruptcy Discharge, and while you are in Chapter 13 as long as you making your payments on time, and the trustee gives you permission
• You can qualify to get a FHA loan 3 years after a foreclosure.

Additional Information about FHA Loan Programs

• The FHA allows you to live in one unit of a multi-family residential property that you are buying. Mortgage payment costs can be offset from the rental income of the other units.

• The FHA does not allow you to hold more than one of their loans at a time.

• If you are a teacher, law enforcement officer, a California resident and a first time home buyer, or if you are purchasing a HUD repossessed home or a home that needs improvements, there are special loan programs for you.

• The Nehemiah or Ameridream 100% gift financing option is another way you can purchase a home. If you can negotiate with the seller to give you 6% towards your closing costs and down payment then these programs turn some of that money into a gift which eliminates your need to have 3% of your own money in the bank to qualify. Those buying their first home have a great option with this loan program.

When buying a new home, it is always wise to first contact a loan officer specializing in FHA loans. Knowing about FHA loans before you begin your home buying process with a real estate agent can save you a lot of time, energy and yes – money!