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The major reason to consider getting an FHA loan is because an FHA loan has less stringent criteria than those used by banks and credit unions for qualifying you for a conventional mortgage. As such, an FHA loan may provide an ideal choice for first-time home owners or individuals rebuilding their credit.

For instance, the FHA allows you to use 31% of your income towards housing costs and 43% towards housing expenses and other long-term debt. With a conventional loan, this qualifying ratio allows only 28% towards housing costs and 36% towards housing and other debt.

Low-income and first time homebuyers are attracted to FHA-insured loans because the agency requires only a 3.5% down payment.

The FHA is also generally more flexible than conventional lenders in its qualifying guidelines. In fact, the FHA allows you to re-establish credit if:

• Two years have passed since a bankruptcy has been discharged

• All judgments have been paid

• Any outstanding tax liens have been satisfied or appropriate arrangements have been made to establish a repayment plan with the IRS or state Department of Revenue

• Three years have passed since a foreclosure or a deed-in-lieu has been resolved

For more information on the FHA and how you can obtain an FHA loan, visit the HUD web site or call a HUD-approved counseling agency at 1-800-569-4287 or TDD: 1-800-877-8339.

HUD is the nation's housing agency committed to increasing homeownership, particularly among minorities; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development as well as enforces the nation's fair housing laws.