The FHA is undertaking a controversial move that could either help alleviate the inventory of foreclosures on its books or present a real moral hazard for taxpayers.

If you were foreclosed on 3 years or more ago, you are eligible to buy again under the FHA home loan program. This is a legitimate opportunity, but is it the right decision for FHA to make?

Well, this is a taxpayer-supported organization that has something like $15 billion in debt. Yet I don't want to stand in judgment of that.

People who faced a foreclosure may have lost a job, fallen ill, or gone through a divorce. That's not to make an excuse, but it is a fact. Only a small percent of people by comparison were freeloading off the system and happily living for free as long as the could.

So I don't want to get into the moral discussion here. But from a practical standpoint, I want to let you know about this.

You still have to have 3.5% down. So if you're buying a $150,000 home, you must have $5,250 for downpayment. You may need more for closing costs
and fees. In addition, your credit score need only be in the 600s.

Clearly, this is a way for the FHA to move foreclosure inventory. You'll want an experienced FHA loan officer to help you through the process. But first, check your credit to make sure nothing else in your life will prevent you from qualifying.

Image of Clark Howard About the author: Clark Howard

Clark Howard is a consumer expert whose goal is to help you keep more of the money you make. His national radio show and website show you ways to save more, spend less and avoid getting ripped off. View More Articles

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