From all the available home financing loans available in the market today, the easiest one to comply all the requirements with is the FHA loan restriction. These loans are insured by the Federal Housing Administration of FHA to help most Americans that belong to the lower income brackets who cannot qualify for conventional home loans. Now, because of the current credit crunch, the FHA had announced a lot of changes that would really help millions of Americans had been badly hit by the housing crisis and the worst recession this country had seen in the past few decades.
One good thing on the FHA loan requirement for income is that they don't require you to have a minimum income for obtaining a loan. But it is important to keep in mind that you must be able to prove that you have a steady and stable source of income for the past three years.
Some of the allowable income sources that you can determine would be Social Security income, retirement pension payments, child support and even unemployment compensation! It could also come from a part-time job or from quarterly or yearly bonuses that you receive as long as it is sufficient and are steady.
They will also require you to present your billing statements, whether on utilities like electricity or credit cards, so it is a must that you had been able to pay these bills on time.
In terms of FHA loan restriction on debt to income restrictions, they will allow you to use not more than 29% of your total income in paying your loan at the total of 41% on housing loan payments including other debts that you may have. This is quite liberal compared to what conventional loans would require you. It only allows you a maximum of 28% on housing and a total of 36% including your other debt.
The down payment specified by the FHA loan requirement is also very lax. As of January 1, 2009, FHA had only imposed at least 3.5% of the total loan amount for down payment! This way beyond what conventional loans would ask you to shell out. Because most of these loans are uninsured, they require paying at least 10% of the total loan amount.
Aside from that, credit score requirements are lot more flexible in FHA loan restriction than that of conventional loan restrictions. Some states require borrowers of FHA loans to have at least 580 whereas conventional loans requires you a credit score of 720. Some private lenders can even grant you an FHA loan even without a credit history. They even offer you flexible payment options. Just ask your lending officer for details on this.
What's even great is that even if you had bad credit history, they can still allow you to re-establish access to credit if a bankruptcy or tax liens have been paid in a span of two years or if the borrower had made arrangements on how to pay the debts.
All in all, FHA loan is simply allows everyone to have the key to their dream home.
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