For those who've had some financial issues in their past, the dream of becoming a homeowner may seem out of reach. If you have been plagued with low credit scores, foreclosures and a past bankruptcy, you should know that the government has created a loan program just for people like you. The Housing and Urban Development agency has a loan program that falls under the Federal Housing Administration (FHA) that allows people to stop giving their hard-earned money to a landlord and begin investing it in a home of their own. To learn more about this government-sponsored loan program from the FHA, read on.

Low Credit Scores

Banks are increasingly reluctant to lend money to people with low credit scores, but the FHA program provides loans to people with scores as low as 580. To qualify with a 580 and above score, you must be willing to put at least 3.5% of the home purchase price down. Since many traditional (or "conventional") mortgage lenders can require down payments of far more, for example 20%, this presents buyers with a wonderful opportunity to get into a home, even those with less than perfect credit.

If your credit score is somewhat less than 580, the FHA also has an alternative for you. If you can manage a 10% down payment, you may still qualify for a home loan with a score of at least 500.

Foreclosure

Banks are extremely wary of consumers who have already had a property foreclosed upon, and many of those potential homeowners don't even bother trying to obtain a home loan. The FHA believes in giving people another opportunity to become a responsible homeowner, so it is possible to qualify for a home loan with a foreclosure in your past. You must, however, be at least three years past your foreclosure and show that you have learned to use credit more wisely since that time.

Bankruptcy

Whether you just had some bad luck or made some bad financial decisions, bankruptcy is a fact of life for some Americans. Fortunately, the FHA allows previous filers to qualify for a home loan, so the fresh start that bankruptcy provides can result in owning a home of your own. You must be at least two years past your bankruptcy discharge (not your filing date) and, just as with a foreclosure on your record, show a wise use of credit since your bankruptcy.

Other perks of FHA loans:

1. The loan is guaranteed by the government, which means that banks may be more eager to make the loan since it's guaranteed to be paid off.

2. FHA loans are assumable, which mean that should you decide to sell your home, the next owner can simply assume the loan. This can make it much easier for the new buyers and may help you sell your home faster.

Talk to a representative from your mortgage company to find out more information about FHA loans and get started on finding your dream home today.