The Federal Housing Administration or perhaps known as FHA has been extremely helpful to those who need a guarantor particularly for someone whose financial background is not that commendable – they can easily get a bad credit FHA home loan if he isn’t able to obtain a regular home loan from any lending institution.

We can’t deny the reality that a bad credit score will not do us any good especially in terms of earning the trust of other people who might be able to give us economic assistance. Thanks to FHA, it is now comparatively easy to have a home loan even when you have a bad credit history. But like any other financial programs and schemes out there, this is not for everybody though.

So what really is an FHA loan and who are able to avail an FHA assurance?

An FHA loan is a home loan that is insured by the FHA – this means, if in case the borrower defaults on his home loan, the FHA will have to pay for him. This enables the borrower to borrow a large amount of money from a lender given that he’s got the backing of FHA. But as stated above, not everyone can avail of this assurance.

To qualify for this program, you’ll need to make sure that your debt to income ratio is sufficient – it should be better than 29:41. A good credit history is also essential though it is not necessary as long as you can prove that you will be a better lender this time.

What’s great about a Federal Housing Administration guaranteed home loan is the fact that the program could lower down your down payment to as low as 3%. This is very helpful to most debtors given that it would stop them from getting instant money from other own pockets just to start out on a loan.

But of course, all of these advantages do not come free but then again, nothing is free these days anymore. In the condition of an FHA guarantee, the borrower will need to pay FHA a borrower’s fee as well as an MIP or mortgage insurance premium of 2.25% aside from a small ongoing fee for each monthly payment that he makes for the loan. But if you total all these fees, it’s really nothing compared to the reality that you were able to get one of these home loans for bad credit because you have the FHA assurance.

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