First Time Homebuyers

Can I really buy a house?

For millions of people every year, the answer is "yes", and an FHA mortgage might be the way you can. Every year FHA helps thousands of first-time homebuyers just like you move into the house of their dreams. A home is an investment, it can save you money and it's a place to live and raise children. It's a plan for the future and an investment in your community. That's why we at FHA want all Americans to have an opportunity to enjoy the benefits of owning a home.

Knowledge opens doors. This is literally true when it comes to buying a home. To become a first-time homebuyer, you need to know where and how to begin the home buying process. The following questions and answers will give you basic knowledge. and the tools necessary to navigate the entire process - from deciding whether you're ready to buy, all the way to that final proud step, getting the keys to your new home!

Are you ready to buy a home?

You can find out by asking yourself some questions:

• Do I have a steady source of verifiable income? Have I been employed on a regular basis for the last 2-3 years? Is my current income reliable?
• Do I have a good record of paying my bills?
• Do I have few outstanding long-term debts, like car payments?
• Do I have money for a down payment?
• Do I have the ability to pay a mortgage every month, plus additional costs?

If you can answer "yes" to these questions, you are probably ready to buy your own home.

Isn't buying a home really hard? Don't you need a lot of money down and perfect credit?

It's not nearly as hard as you might think. Our 100 Questions and Answers covers most of the situations that you might think of. FHA understands that many first-time homebuyers may have had some financial problems in the past and don't have a lot of money saved. That doesn't mean you can't buy a home. Because FHA insures your mortgage, lenders are more willing to give loans with lower qualifying requirements, making it easier for you to qualify (or get approval). Even if you have had credit problems such as bankruptcy, it is easier for you to qualify for an FHA loan than a conventional loan. FHA has a low 3% down payment requirement, and that money can come from a family member, employer or charitable organization. Many other conventional loans don't allow this.

How can I find out what my credit rating is?

There are several ways to do this. You can purchase a credit report from one of the three national credit reporting agencies: Equifax, Experian and TransUnion. They also offer extra services for a price, where you can get regular reports on your credit.

Better yet, you may be entitled to a free credit report every twelve months from each of these three agencies. To request your credit reports, visit www.annualcreditreport.com. At this site, you can learn how to get your free credit reports. You might also want to visit the Federal Trade Commission's web site for consumers at www.ftc.gov/bcp/consumer.shtm for information about free credit reports and for some good advice about your credit.

Purchase/rehabilitation loans

Sometimes you might see a home you'd like to buy, but it needs a lot of work. FHA has a loan for rehabilitating and repairing single-family properties called the SF Rehabilitation Loan program (203k). You can get just one mortgage loan which includes the mortgage and the cost of repairs combined. The mortgage amount is based on the projected value of the property with the work completed, taking into account the cost of the work. The advantage of this loan is that you can buy a home that needs a lot of work, but you still have only one mortgage payment, and you can complete the repairs after buying the home. "Read more about these loans."

I'm ready to get started. What do I do next?

FHA will take you through the entire home buying process. Click on the sites below for a lot of information on buying a home with an FHA mortgage. You can even get pre-qualified for a mortgage.

Overview of the buying process

See how much house you can buy, and whether you qualify for an FHA mortgage

Information about different FHA loans

10 Things to Know About FHA Loans

10. You Can’t Make Too Much Money to Take Out An FHA Loan
FHA Loans are designed for low- to moderate-income families, but there is no upper limit on income for FHA borrowers.

9. Before Sub-Prime Came Along FHA Was a No-Brainer for First-Time Homebuyers
Back in 1995 FHA counted for about 11% of the mortgage market, but when sub-prime came along everything changed. By 2004 FHA’s share had shrunk to a mere 3.3%.

8. FHA is on the Way Up
FHA Loan applications are skyrocketing in comparison with recent years. In the month of August this year FHA applications had risen over 20% from August 2006.

7. An FHA Loan Can Be Used to Make Your Home More Energy Efficient
An Energy Efficient Mortgage (EEM) can be packaged into your FHA loan for up to 5% of your property’s value (not to exceed $8,000) or $4,000.

6. An FHA Refinance Can Save You from Sub-Prime
FHASecure, the new program to help out troubled sub-prime borrowers, will allow qualified borrowers to refinance to an FHA Loan.

5. The FHA Offers Reverse Mortgages
With an FHA Reverse Mortgage seniors who own their home can receive monthly payments based on their home’s value, and they do not have to pay anything back as long as they live in the home.

4. Safer Adjustable-Rate Mortgages Available from the FHA
Although adjustable-rate mortgages are the cause of today’s sub-prime woes, not all adjustable-rate loans are bad. The FHA has an adjustable-rate mortgage (ARM) with annual and life-of-loan caps that lower the risk of taking out an ARM.

3. The FHA Finances More than Single-Family Homes
There are FHA programs for multifamily housing and even a special program for providing loans to hospitals.

2. FHA is Stepping into the 21st Century
After years of complaints about the FHA’s failure to modernize, current legislation will lower FHA down payment requirements and raise FHA loan limits.

1. You Can Take Out an FHA Loan with Less-Than-Perfect Credit or No Credit
The reason that FHA Loans have been a long-time success and are great for first-time homebuyers is that your credit score does not determine your eligibility. Other factors, such as income, employment, and utility payments, are used to qualify applicants for FHA loans.

Text on this page from www.fha.gov and fhabook.com