A lot of people wish to own their own home, one day, but have various impediments to attaining that goal. One of these is a bad credit score. Having bad credit negatively impacts your life, in a variety of ways, and one of the worst ways in which it does this is by inhibiting your ability to get a loan, to purchase a home. For that matter, having bad credit makes getting any type of loan difficult, but in the case of home loans, this can be especially frustrating, since loans are really the only way to buy your own home, under normal circumstances. Luckily, there is one way around this problem, and it is known as an FHA loan, also known as a bad credit home loan. These loans are intended so that even those with bad credit can qualify for them and purchase a home.
FHA loans are linked to the Federal agency, known as the Federal Housing Administration, or FHA, insofar as the FHA insures them. What this means is lenders who provide FHA loans agree to provide home loans to people with bad credit, on the condition that the FHA provides a top-notch insurance policy, protecting them from liability, in the event of foreclosure. This insurance is such a critical aspect of the concept of an FHA loan, since it is what enables the lender to provide the loan, at a reasonable interest rate. The only other way to get a loan, when you have bad credit, is to agree to one that is unfavorable, with very high interest rates and, usually, a sizable down payment. FHA insured loans have low interest rates and ver low down payments, since the risk factor is eliminated, and the government is providing the insurance. In this way, the lenders are not doing anyone a favor, as they are still getting a good deal, and the borrower is not being taken advantage of, which is what usually occurs, when people with bad credit get loans. In fact, due to the reasonable rates and down payments, even people without credit limitations, sometimes opt for the so-called bad credit home loans.
Needless to say, as they involved the Federal government, there are tons of regulations, surrounding these loans, conceding how they should be used, who is eligible, and what types of properties are eligible. FHA home loans are meant to get affordable housing for people who do not own their own homes. They are intended for first time home buyers, not for people who want a secondary place of residence or a rental property. If your purposes are not to live in the home, full-time, you must find a different way to finance it. The property, itself, is also subject to strict guidelines. One of the biggest stipulations is that the house is approved as safe and livable, insofar as being up to every safety code and regulation. If the home needs to have work done, to reach that point, you cannot apply for an FHA loan.