If you are thinking of buying a home in the near future you may want to consider the FHA Home Loan as your financing option. You could save considerable amount of money with this type of loan if you can meet the FHA Loan Qualifications. Because of some strict guidelines set by the federal government not everyone will qualify for this type of home loan.

Most of the people that use a HUD FHA loan to finance their home are first time home buyers. This is because of the low down payment required and less restrictive credit requirements than conventional loans. But, there are certain qualifications you have to meet before you can get FHA Home Loan.

The first FHA Loan Qualifications is you have to live in the home you are going to purchase. It has to be your primary place of residence. People who are investors can not buy a property with this kind of loan.

FHA has a maximum loan amount for each county in the country and this loan amount is determined by taking into account the living costs and price ranges of the local real estate market.

The amount of down payment required by FHA is currently 3.5% unless you have credit scores below 580, then you will need a 10% down payment. Most FHA lenders are requiring a credit score of at least 620 in today's mortgage market. An exception to this 3.5% down payment is the HUD $100 Down Payment Incentive Program. It is a program were you can buy a HUD home foreclosure with only $100 down. You can get more on the HUD $100 Down Payment Incentive Program by clicking on the links at the end of this article.

Another FHA Loan Qualifications is having a solid employment history hopefully with the same employer. To qualify for a FHA home loan you should have been at the same place of employment for 1-2 years, even if you are self-employed you should at least been in the same line of work for that time period. If you are a recent graduate, your diploma may be accepted instead of a work history.

If a home buyer that is self-employed, they will have to provide 2 years of income tax returns plus a profit and loss income statement from their business if it is incorporated. The debt to income ration for the home buyer should not be over 41% to meet the FHA Loan Qualifications. But if you have certain types of debts such as student loans then they will allow your debt to income ration to go as high as 45%.

FHA loans are very popular today because a down payment of only 3.5% is one of the lowest down payment requirements in the market. Most conventional loans are now requiring a 20% down payment.

The seller has in the past been able to pay up to 6% of closing costs for the buyer but that may be changing to 3% in the near future. Check with your FHA approved lender for any new updates.

Final point, although a home inspection is not required by the FHA you certainly are advised to get one. The federal government does have certain standards that a property has to meet but it is not the same as a home inspection. But if a house does not meet the standards, the seller must have the needed improvements or maintenance repaired before closing or have estimated costs put into an escrow account. If the seller will not make the improvements then there is a good chance you are not going to finance that property with a FHA home loan.

Most of the FHA Loan Qualifications are less restrictive than conventional loans and a FHA Home Loan is certainly easier to qualify for and with the low down payment it may be the only way most people can buy there dream home!