FHA loans are good for a couple of reasons, the most important being that they allow people who can't qualify for a conventional loan to buy a home.

Specifically, FHA makes it possible by allowing two very important things: 1) you can use a 5% down payment instead of 20%, and 2) you can have a very high (~54%) debt-to-income ratio.

The downsides of an FHA loan are that you have to be buying an FHA-approved property (but this usually isn't an issue) and also you have to pay mortgage insurance.

The only reason not to use an FHA loan is that your debt-to-income is not an issue and you are able to put 20% down.

Good luck with the home purchase. Now's a good time to buy, especially with the 30-year-fixed FHA interest rate about 3.5%.

Luckys' got good points which most-likely apply to your situation-➊FHA's own site has all the information to put you 2 steps abreast of anything most mortgage lenders know.You may believe me, I was a realtor for 4 years during the pre-bubble and most only know what they need to to secure your business.

Best thing to beware of with a lender is their enthusiasm. Meaning, they should be more enthusiastic about explaining the details of the loan than landing your business.

In choosing a realtor, again, what are they enthusiastic about, explaining each step of the process and all the variables involved for a first-time buyer, or simply trying to get you to sign on with them and show you houses? The first thing they should do is secure you a lender whose reputation has remained virtually un-sullied after this last market crash.


➊ http://www.fha.com/fha_loan_requirements.cfm

I just bought a house in May with an FHA loan. The lady wanted to sell quickly, so in order to bring it to FHA standards, she put in about $15,000 worth of work. Brand new wiring, new roof, and a few other things.

Worked out well for us.