Preparation

• Before you can get a loan, you'll need to do is determine how big of a mortgage you can afford. This will mainly be determined by three things: your income, the amount that you'll put down for a down payment, and your credit score. You'll need to show that you have steady employment, and how much money you make. In a typical mortgage, your monthly mortgage payment should not be more than 30 percent of your monthly gross (pre-tax) income. Most down payments are 10 percent to 20 percent of the price of the house, but if you put more money down up front, you might be able to reduce your interest rate and your monthly payments. And the better your credit score, the better interest rate you'll be able to get on your mortgage. You can use mortgage calculators on sites, such as Yahoo!, Investopedia or the U.S. Department of Housing and Urban Development, or talk to a mortgage lender to see how much you can afford. Once you have the finances figured out, decide which areas that you'd want to buy a house.
  
  

Applying for FHALoan

• When you've figured out how big of a mortgage you can afford, and where you want to buy a house, you need to get approved for financing. While you could go to a commercial lender, such as a bank or mortgage broker, many first-time home buyers and higher-risk borrowers go to the FHA for financing. To get an FHA loan, you'll need to apply through a HUD-approved lender, and still be expected to have a credit score of at least 600, enough cash to cover the closing costs and a gross monthly income high enough to cover your monthly payments. The one big advantage of an FHA loan is that your down payment could be as little as 3 percent of the purchase price of the house. FHA programs vary by state, so when you meet with your HUD-approved lender, ask about any additional programs that you might qualify for (besides the FHA loan).
  
  

Types of FHA Loans

• There are several different types of FHA loans that you could apply for. A Section 203(b) loan is the type of loan used most, and allows you to buy new or existing homes, and pay the mortgage off in as little as 10 years, or as long as the standard 30 years. If you want to buy a condo, then you could apply for a 234(c) loan, but check with you HUD-approved lender to make sure that the condo that you want to buy meets FHA standards. If you want to buy a fixer-upper, you can apply for a 203(k) loan, which lets you buy or refinance a home that's at least 1 year old and use some of the loan money to pay for home improvement projects as long as they meet HUD standards and all local regulations.
  
  HUD also has Section 237 loans for people with poor credit who would not otherwise be approved for a low-cost home. Once your FHA loan is in place, you're free to go home shopping, make an offer and buy a house.