


Limited Credit History

If you're a recent college graduate and a first-time home buyer with a limited credit history, FHA allows you to use credit references that don't report to the credit bureaus. Credit references may include payment of monthly rent and utility bills, cell phone service, and auto insurance premiums. FHA underwriters may approve you for a mortgage loan if you can show that you've paid these bills on time each month for at least a year.

Non-Occupying Co-Signer

FHA lenders allow you to use a non-occupying co-signer to help you get approved for a loan. The co-signer must be a blood relative or someone who has had a long-standing relationship with you. If you use a co-signer to increase your credit worthiness, you must include that person's income, assets, liabilities, and credit history on your loan application. It's important to be aware that while a co-signer won't have any ownership in the property, he or she will be financially responsible for repaying the loan if you don't.

Employment History

Although traditional lenders generally require proof that you have worked for at least the last two years at the same job or in the same industry or field, FHA lenders often allow you to use your college experience in place of employment. If you are a recent college graduate who might not otherwise meet the lender's employment history requirement, counting your time in school can help qualify you for a mortgage loan. Generally, you need to provide copies of your college transcripts and diploma as proof. You also improve your chances of qualifying for a mortgage loan if you can show the lender an offer letter from an employer.

Closing Costs

If you're just out of college and working an entry-level position at lower pay, there's a good chance that you don't have the cash to pay the closing costs associated with buying a home. The good news is that FHA loans allow the seller to assist you by paying up to 6 percent of the home's purchase price in closing costs. This saves you from borrowing the upfront cash you need at closing and going deeper into debt.

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