Consumers » Can I Still Get a Loan?

Can I Still Get a Loan?

In short, yes: there are still plenty of loan programs available to qualified buyers. Many lenders have re-evaluated their lending standards over the past year in light of the issues relating to subprime mortgages and increasing foreclosures and have eliminated some products, such as "no down payment" or "stated income" loans. But for buyers who have good credit, verifiable income, and have chosen a home that is in good condition and within the range of what they can afford, there are still many financing options available. Don't assume that the change in standards means you can't get approved for a mortgage - talk with a lender who can help you evaluate your personal situation.

• If you are considering buying, it's a good idea to talk with a lender first to get pre-approved for a mortgage. That way you know in what price range to look for a home based on how much financing a lender is willing to provide you. Keep in mind that pre-approval does not guarantee the loan, which is ultimately based on many factors including the condition and value of the home you choose to buy.


• If you're a first-time buyer or can't afford a large down payment, consider a loan insured by the Federal Housing Administration (FHA). These loans offer many attractive features and are becoming more common given the changing lending standards in today's market. And FHA recently increased its maximum loan limit in the Memphis area from $200,160 to $271,000. You can read more about FHA loans below.


• Be sure you're working with a reputable lender. A good place to start is with a firm that is a member of the Memphis Mortgage Bankers Association, which requires members to adhere to a strict code of ethics. Also ask family and friends for references to lenders they've worked with and would recommend.

Why You Should Consider an FHA Loan

There are lots of good reasons to choose an FHA-insured loan, especially if one or more of the following apply to you:

• You're a first-time homebuyer.
• You don't have a lot of money to put down on a house.
• You want to keep your monthly payments as low as possible.
• You're worried about your monthly payments going up.
• You're worried about qualifying for a loan.
• You don't have perfect credit.

If any of these things describe you, then an FHA-insured loan may be right for you. Why? FHA-insured loans offer many benefits and a level of security that you won't find in other loans including:

Low cost: FHA-insured loans have competitive interest rates because the federal government insures the loans for lenders.

Smaller down payment: FHA-insured loans have a low 3% down payment and the money can come from a family member, employer or charitable organization as a gift.

Easier qualification: Because FHA insures your mortgage, lenders may be more willing to give you loan terms that make it easier for you to qualify.

Less than perfect credit: You don't have to have perfect credit to get an FHA-insured mortgage. In fact, even if you have had credit problems, such as a bankruptcy, it's easier for you to qualify for an FHA-insured loan than a conventional loan.

More protection to keep your home: The FHA has been helping people since 1934. Should you encounter hard times after buying your home, the FHA has many options to keep you in your home and avoid foreclosure.

FHA insures loans for lenders against defaults - it does not lend money or set interest rates. For the best interest rate and terms on a mortgage, you should compare mortgages from several different lenders. An FHA-approved lender can help you start the loan application process.

You may use an FHA-insured mortgage to purchase or refinance a new or existing 1- to 4-unit home, a condominium or a manufactured or mobile home (provided it is on a permanent foundation).

For more information on FHA loans and finding an FHA-approved lender, visit the FHA Web site.