You probably know that mortgage lenders look at your credit, finances, and income when determining if they should give you a loan. What happens if you want a loan but do not meet the standard criteria that lenders look for when evaluating loan applications? One option is to consider applying for an FHA loan. FHA loans offer more flexibility to borrowers with less than stellar credit scores and financial situations. Here are several things to know about FHA loans and how you might be able to get one in your situation. 

They Have Lower Credit Score Requirements

One of the first things a lender wants to know before approving a loan is the borrower's credit score. Do they have a good score? If not, many lenders will turn people away and reject offering them loans. Fortunately, the FHA loan program helps people with low credit scores get loans. While there still are requirements you must meet with credit scores, they are less strict than with other loan programs. For example, you might qualify for an FHA loan if you have a score of 580 or higher. You might even qualify with a lower score, but it depends on the lender. Each lender sets its own criteria for score requirements.  

They Allow You to Prove Income and Credit in Other Ways

One of the top benefits of the FHA loan program is that they let you prove your income and credit in other ways. When you apply for a mortgage, most lenders want to see your pay stubs to ensure that you earn enough money. If you do not have pay stubs, you can use tax returns and bank statements to prove your income when applying for an FHA loan. Additionally, you can use letters from your landlord or utility companies to prove your credit history if you do not have a credit score.

They Do Not Require Large Down Payments 

The final thing to know about FHA loans is that they do not require large down payments like other loan programs. You might have to put 3.5% down or a little more, but you will not need to put 20% down like you might have to with other mortgage programs.

Does the FHA loan program sound like the right choice for you? If so, contact a local mortgage lender that offers FHA mortgages to learn more about the application process.