Can You Get a Personal Loan for an FHA Loan?
The Federal Housing Administration (FHA) is part of the U.S. Department of Housing and Urban Development (HUD). The FHA wing of HUD is specifically designed to help borrowers afford mortgages. Through FHA programs, you can qualify for low-down payment, low-interest loans. Since these loans are targeted at homeowners, though, they are not considered personal loans.
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Definitions
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A personal loan can range greatly in purpose and design. Generally speaking, a personal loan is a lump sum given to an individual for an unspecified reason. It can be used to pay medical bills, take a vacation, meet financial burdens in a difficult time or make a luxury purchase. On the other hand, a home loan is given only for the purchase of a home. It is typically secured with the home itself as collateral.
FHA Loans
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An FHA loan is a specific type of home loan. With this loan, a borrower receives a private loan from any lending organization. Next, the borrower receives an FHA guarantee, which is a type of insurance for the lender. If the borrower can no longer pay the loan and has an FHA guarantee, then the FHA will step in and pay off the loan on the borrower's behalf.
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Qualifications
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Since the FHA is taking a risk by issuing an FHA guarantee, it does not do so lightly. The FHA has strict lending guidelines, including credit and debt requirements. It also makes certain that the home a borrower will purchase meets FHA standards through an inspection. If you are looking for a personal loan, you will not meet FHA standards in terms of a qualified purchase, so you will not be able to receive the guarantee.
Options
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Generally speaking, the federal government does not engage in the personal loan business. There are government programs for business loans, farm loans, education loans and housing loans, to name a few. If you need a personal loan that does not qualify for any of these programs, it is best to seek a direct loan from a private lender.
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References
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