Federal Housing Administration (FHA) has come up with various schemes to encourage home ownership. FHA home loans are preferred by many prospective as well as existing home owners for various reasons.

Small down payment and easy conditions are some of these attractions. However, not all applications get approval of FHA. A borrower should meet criteria laid down by FHA to get approval of home loan application.

To qualify for FHA home loan you should be employed, preferably with same employer for at least two years. In case employer is changed within that period you need to furnish proof of regular income.

Salary or wage during last two years from application date should show increasing trend or at least remain steady. However, there is no minimum income limit to qualify for FHA home loan.

Applicants with low credit score may be relieved to know that FHA home loans may be approved even if you have low credit score. There are instances where FHA granted home loan without any credit score.

Prospective home owners who filed bankruptcy two years ago and maintained good credit standing in following period may apply for FHA home loan. Such applicants should have cleared all outstanding tax liens after bankruptcy.

If you have experienced foreclosure, you may still apply for home loan to FHA, provided the foreclosure was affected at least three years ago. You need to maintain good credit record post foreclosure period to qualify for home loan from FHA.

Down payment required by FHA is lower than other financial institutions offering home loans. Usually 3% of the home price is required by FHA as down payment of the home loan. In some extreme cases where the applicant has financial problems in acquiring this down payment, relatives or friends are allowed to deposit it.

Monthly repayment amount should not be more than 31% of the gross salary, according to rules laid down by FHA. This ensures that you are comfortable in paying back the loan. There is no prepayment penalty leveled by FHA. If you can find better interest rate then you are free to repay the loan.