If your credit or down payment prevents you from qualifying for a conventional loan, an FHA loan can be an attractive alternative. Likewise, if you're buying a home in a rural area or are eligible for a VA loan, these options might be easier to qualify for.
If your credit score is causing you problems, look at the mortgages offered by Barclays, Halifax, Masthaven Bank, Royal Bank of Scotland and Santander as all of these lenders will consider applicants with a poor credit history. If you've struggled to save up a deposit, 90 or 95% mortgages could help you out.
Personal loans are easy to get when they offer flexible credit score and income requirements. If you have a fair credit score, which includes FICO scores from 580 to 669, you may be able to qualify for an unsecured personal loan from a traditional lender.
An FHA loan is like any other loan, but it's insured by the FHA. It can be easier to qualify for than a regular loan (eg, lower down payment requirements). If you can qualify for a conventional loan there's normally no reason to go the FHA route.
Common reasons for FHA loan denial include low credit scores, high debt-to-income ratios, insufficient income, insufficient funds for a down payment, and properties not meeting FHA guidelines.
FHA Loan: Cons
Here are some FHA home loan disadvantages: An extra cost – an upfront mortgage insurance premium (MIP) of 2.25% of the loan's value. The MIP must either be paid in cash when you get the loan or rolled into the life of the loan. Home price qualifying maximums are set by FHA.
Banks tend to be a solid pick for established borrowers with a positive credit history. Perks tend to include lower rates and more customer service options. Private lenders can be a great choice for borrowers who need funds fast. If you need more lenient approval for whatever reason, this may be an option to explore.
HDFC Bank customers can get Personal Loans with minimal or no documentation. In fact, if they are pre- approved for a Personal Loan, they can easily apply for it.
Coventry Building Society, HSBC and Santander take nine days, six days and five days, respectively. That makes Santander lender the fastest lender of those we looked at. NatWest says online it typically processes 43% of applications within seven days and 30% within 8 to 14 days.
Loans backed by the Federal Housing Administration require just 3.5% down, making them a popular choice among first-time home buyers. (If your credit score is under 580, you would be required to put 10% down.) In general, FHA loans offer more flexible qualifications than conventional loans.
On a salary of $100,000 per year, as long as you have minimal debt, you can afford a house priced at around $311,000 with a monthly payment of $2,333. This number assumes a 6.5% interest rate and a down payment of around $30,000. The 28/36 rule is often used as a guide when deciding how much house you can afford.
1. Conventional loans. A conventional loan is any mortgage that's not backed by the federal government. Conventional loans have higher minimum credit score requirements than other loan types — typically 620 — and are harder to qualify for than government-backed mortgages.
Lenders need to determine whether you can comfortably afford your payments. Your income and employment history are good indicators of your ability to repay outstanding debt. Income amount, stability, and type of income may all be considered.
Eligibility requirements for personal loans from credit unions are less strict than a bank's criteria. In particular, a low credit score may not disqualify you from a loan with a credit union because a credit union is more likely to take into account your overall financial circumstances.
An FHA loan will typically be the easiest mortgage to qualify for because it offers the lowest credit score requirement — far lower than for a conventional loan — and requires only a 3.5% down payment.
Some reasons a seller might refuse an FHA loan include misconceptions about longer closing times, stricter property requirements, or the belief that FHA borrowers are riskier.
The three primary factors that can disqualify you from getting an FHA loan are a high debt-to-income ratio, poor credit, or lack of funds to cover the required down payment, monthly mortgage payments or closing costs.