If you are a first time homebuyer or someone with a tattered credit score, the Federal Housing Administration (FHA) home loans may sound alluring to you. With low interest rate, backed by the government (in case you default) are two among the other benefits by the FHA.

What is exactly the ? The FHA home loan is mortgages that are insured by the Federal Housing Administration, a United States government unit under the Housing and Urban Development (HUD). The FHA does not give loans but they insure the loans in case you default, so that the FHA approved commercial lenders could give you a better offer and rates which you won’t be having with a traditional one.

Looking back, the FHA home loans are conceptualized in 1930's during the Great Depression era in response to the growing rate of defaults and foreclosures. The good news is the FHA is for every American, but you have to qualify for the FHA home loan to get one. Try this checklist to see if you pre-qualify for an FHA home loan:

1. Do you have a steady employment history of at least two years working experience with your current employer? (Stability of job and income is the main factor.)

2. Do you have an increasing income? So that FHA can correctly assess your paying ability, show them that you are earning a fixed/rising amount in your current job, not a fluctuating one.

3. Can you boast about your credit report? It is FHA's requirement that all their applicants are in good credit standing although it’s not the main requirement. However, the FHA requires that you don’t have a more-than-a-month late payment within the last two years in their credit reports.

4. Do you have any history of bankruptcy? Better have it two years or more, ago. Show that you had regained financial stability for the past two years. You should be in a good credit standing for two consecutive years.

5. Do you have foreclosures? Better have it three years old at the very least. You should have a good credit standing for the past three years.

6. How many percent do you apply for your loan? Do not exceed 30% of your total monthly income. If so, your application will likely be denied. Look and settle for a house that is just within the set limits.

Being pre-qualify for the FHA loans is just the first step. FHA will review your application and proceed from there. The pre-qualification step assesses your income, assets, and your ability to pay. Afterwards, you are to show it to the lender who’ll study your case. You'll get the loan once they see that you are indeed, financially stable. If you qualify, don’t hesitate to ask what other advantages they are offering today.

If you can’t pre-qualify for the FHA loan, don’t waste your time and try to look for other ways. But my suggestion is, prepare yourself from now on, so that three years from today, you could qualify for an FHA home loan (which is so far I see, the best option in home loans).