Today we take Florida home loan approvals for granted, but it wasn’t always that way. Back in the day, it was more likely that if you did get a home loan,  your loan would have been for a five-year “term” mortgage and in many cases you may have needed to put fifty percent down as your deposit. Then, when the five year term was up, you went and applied for a replacement loan.

Unfortunately, term loans have a very particular problem; they are not always offered, specifically if individuals lose their jobs or if home prices and values decline. That was the typical scenario after the Great Depression, but in 1934 the newly-formed Federal Housing Administration (FHA) began using long-term mortgages insured by the federal government. The outcome was that countless individuals could now have access to long-term home loans with very little down that could easily allow them to ride-out bumpy economic movements.

Today the FHA home loan program is an essential alternative for millions, as they enjoy FHA loans which allows for higher percentage of the population to become home owners.

Whatever the figures may be, if you are a new home buyer or someone searching for easier qualifying requirements, the FHA loan program is a extremely viable option and you should definitely consider it. And due to the ever changing financial industry, it’s very likely that we will continue to see a lot more FHA loans in the future.

Under the FHA program you can purchase with as low as three percent down. That’s ninety seven percent financing, an incredible bargain by conventional and standard requirements; and it is definitely correct to mention that 100 percent financing is now readily available and offered. Nevertheless, the three percent down payment can be in the for of a gift or a grant, and in the past the FHA has even allowed couples to create “bridal registries” where everyone from friends and family members could actually contribute to the down payment fund.

In addition, the FHA program also permits owners to kick-in a “seller contribution” of one percent to as much as six percent of the sale amount. While you can bet that a lot of sellers will more than likely not participate with much joy, in a buyer’s market a seller’s contribution may be the difference between making or not making the sale.

In most all cases, to get approved for a home mortgage loan providers look at your regular monthly earnings and your expenses. For a conventional loan the guidelines might allow you to spend approximately twenty eight percent of your gross regular monthly earnings on real estate expenses such as mortgage interest, principal, property taxes and home insurance (PITI). In addition, loan standards may permit you to invest thirty six percent on PITI plus other monthly financial obligations such as credit card expenses and vehicle loan payments.

With FHA fixed-rate financing the normal ratios are 31/43, which are very liberal requirements that will allow a borrower to have access to much more funding than with the traditional and or conventional loans. And if you have an energy-efficient home the FHA assumes that you will have lower energy bills and will allow for even more money for home mortgage payments.

There are, however, some issues and complications with FHA home mortgage loan funding.

Under the FHA program you are actually buying with very little down payment; and this is possible because FHA insures the loan, but you have to pay an insurance premium. The premium is equal to 1.5 percent of the sale price at closing (a quantity which can be funded with loan) and.5 percent per year for the remainder of the loan balance. To put it simply, if you can purchase with a minimum of twenty percent down or with an 80-10-10 loan, you may want to skip the FHA program and avoid the insurance coverage costs.

FHA also has also a set of complex loans limits which may cause the loan to not be enough to buy the residential or commercial property you are looking at.

If you live in a neighborhood with more economical housing it’s likely that the amount you can obtain under the FHA program will be lower. Larger FHA loans are readily available for two, three and or four unit properties, providing a minimum of one unit is owner-occupied. Your home loan provider can explain the amount of FHA funding available in your neighborhood for the type of home you are looking to buy.