The Federal Housing Administration was established to encourage home ownership throughout the country with the belief that home ownership increases the stability of a community. Prior to the creation of the FHA, large down payments were required to secure a mortgage loan. At present, a minimum of 3% investment is required by the borrower for the purchase of a home. As an incentive to investors who purchase loans, FHA insures the loan against default, should the borrower fail to repay. FHA guidelines also allow for greater flexibility with regards to credit history and qualifying ratios.

Indiana FHA program opens up opportunities that conventional mortgages do not offer:

Expanded Debt Ratios to 29%/41%
Non-traditional credit history is considered
Expanded credit criteria.
All of the down payment may be gifted
Seller may contribute up to 6% toward the closing costs.
Non-occupant cosigners are allowed.
401-k loans are not counted in the debt ratios.