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FHA Home Loans Great for First Time Homebuyers

FHA Home Loan Services extends low rate financing for first time homebuyers with discounted closing costs with very little required for a down payment for home purchase opportunities. HUD defines a first time home buyer as an individual, who has not had an ownership interest in a home within the last three years. The Federal Housing Administration (FHA) is part of the U.S. Department of Housing and Urban Development (HUD). FHA has been helping low- and moderate-income buyers since 1934. When buy a home, one of the biggest barriers is the requirement most lenders have that requires you to have at least a 20% down payment. FHA prides themselves in offering a first time homebuyer loan with a small down-payment and an affordable interest rate. Most 1st time home loans insured by FHA only require a 3.5% down-payment.

FHA Interest Rates Drop Below 4% for Consumers Seeking 1st Time Home Buyer Loans

The time for financing a home has never been brighter. Besides FHA interest rates falling to record lows, home prices have fallen to 10-year lows as well. These factors significantly increase the affordability for FHA first time home buyers in the United States. If you are first time home buyers and you need help getting financed, start with the FHA first. For eight decades the Federal Housing Administration has been ensuring fair housing while extending easy guidelines for first time home buyers.

FHA Purchase Loan Updates

Are First Time House Buyers Missing the Boat with Increased Home Prices?

According to the National Association of Realtors, 1st time buyers drove 28% of home buying transactions in May. This was at 34% last year for those of you who were wondering.

First Time Home Buyer Loans
New home buyers could get a $7,500 Tax Credit. Don't wait, because the government has said that the loan credit expired 12-31-2009.

Financing a home is more affordable than ever because rates have reached an all-time low and loans for first time home buyers have more flexible standards than in previous years.

FHA Home Purchase Loans
First Time Homebuyer FHA Loans
Teacher Next Door Loans
CHFA Loans
Home Loans with Bad Credit

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30-Year Mortgage Rates Fall to the Lowest Point Since Freddie Mac Started Recording Interest Rates in 1971.

Will HUD raise insurance premiums on 1st time home buyer loans in 2013? Most mortgage executives believe that they will increase insurance premiums on all their FHA loan programs.


First Time Home Buyer LoanWhile housing prices are going down, they're still high, and a 20% down payment could really set you back, especially if you are single. FHA only requires a 3.5% down payment (it used to be 3% down until the new housing laws passed). And, until recently, you could get it from family, friends, employers, churches, city/county/state funded down payment assistance programs and even seller-assisted down payment programs. Still, if you are looking for first time home loans with limited credit, FHA is likely your best bet.

Fannie Mae also offers a first time home loan but a good credit history will be needed. Typically the GSE, like Fannie and Freddie will require higher credit scores than FHA. People with low fico scores should consider FHA for bad credit first time home loans.

After October 1st, however, you won't be able to use a seller-assisted down payment program. But, you can still use relatives and the city/county/state assisted programs to help you come up with a down payment. The first time home buyer mortgage is a special finance tool that is insured by the Federal Housing Administration and guaranteed by the Department of Veteran's Affairs.

FHA has less stringent qualifying criteria than conventional Fannie Mae and Freddie Mac home loans. For example:

  • If you have FICO scores of 550 or higher and a good payment history for the past 12 months, you could qualify.
  • If you don't have a FICO score, you may still qualify by showing non-traditional credit sources like rent receipts, utility payment receipts, to show that you pay these bills on time.
  • The FHA permits borrowers to have a higher debt-to-income ratio than most insurers typically allow.
  • You could 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 could qualify to get an FHA loan 3 years after a foreclosure.
  • A qualified borrower can assume FHA loans. Sellers can pay up to 6% of the sale price towards buyer's non-recurring and prepaid closing costs.

Though most people assume that an FHA first time homebuyer loan is issued directly from the Federal Housing Administration (FHA), the truth is that FHA simply insures the loan and passes the cost of insuring the loan to the borrower in the form of private mortgage insurance (PMI). This is an insurance policy that safeguards the lenders in case a borrower defaults on the first time home buyer loan. Once your loan amortizes to 78% loan to value, the PMI may automatically be cancelled. Check with your FHA lender for details. As of 2007, mortgage insurance is tax deductible. It is until 2012. This could save you up to $350 on your taxes.

FHA finances more single family real estate homes than most of the other types of properties combined. FHA rates remain affordable, even if you have less than perfect credit. There is no penalty for early payoff, and there are no termination fees for refinancing, which means that if you refinance your loan and pay it off early, you won't have to pay additional fees.

According to Personal Finance Editor, Allison Bisbey Colter, in "Consider an FHA Loan" on April 5th, 2007, "Sub-prime lenders are closing up shop or tightening their lending standards, making it tougher for people who are first-time homebuyers or have impaired credit to get financing." The Federal Housing Administration, however, is continuing to step up in an ongoing effort to help borrowers with less than perfect credit buy and refinance homes.

Are you a cash-strapped or credit-challenged first time buyer? Take advantage of the new tax credit offered by the Housing and Economic Recovery Act of 2008 that was just signed into law on July 30, 2008. You can get up to $7,500. Fill out the free loan quote on this page to see if you qualify for a FHA purchase loan or refinance loan. We are experienced with FHA and 1st time home buyer loans, and we'll be happy to help. For updated info in regards to 2013 FHA Loan Limits, please check with your loan officer or check www.HUD.gov


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All FHA mortgage products are provided by FHA Home Loan Services, which may arrange loans with third party providers. We offer services for national lenders. We cannot guarantee all loans will be made or whether all loan applications will be approved by the investing bank.
This is not a commitment for a FHA house loan or an advertisement for credit.
©2008 FHA Home Loan Services - All Rights Reserved - Disclaimers - Not everyone will qualify for a first time home buyer loan.