Can I Qualify for an FHA Loan?

Can I Qualify for an FHA Loan?

July 25th, 2018 | FHA Loans, Government Loans

FHA loans (those sponsored by the Federal Housing Administration) are mortgages that allow low down payments and have relaxed credit score requirements, making them very popular with first-time homebuyers and those with less-than-perfect credit. If you think an FHA loan might fit your needs, the first step is to determine if you can qualify. Here are the basic requirements: 

Credit Score & Down Payment Requirements for FHA Loans

Credit score and down payment requirements are tied together under FHA loans. For those who have a FICO credit score of 580 or higher, the minimum down payment requirement is only 3.5% of the home purchase price. If the FICO score is between 500 and 579, a 10% down payment is required. Those with scores below 500 are not likely to qualify for an FHA loan. 

Borrowers must have at least two established credit accounts such as credit cards or other monthly payments, in order to prove responsibility with debt.

Debt-to-Income Ratio

While there is no minimum or maximum salary requirement for FHA mortgages, borrowers must have a debt-to-income ratio of 50% or less. That means all of your monthly debts, including credit cards, students loans, car payments and the new mortgage must not make up more than 50% of your monthly income.

Additionally, borrowers may not have any past due federal debts in order to qualify. These would include previous FHA loans, taxes or any other legal judgments.

FHA Loan Limits

FHA loan limits are based on the average housing costs in the surrounding area and can change periodically. The 2018 loan limit for single-family homes in most U.S. areas is $294,515 and $679,650 for higher cost areas.

Documentation for FHA Loans

Several pieces of documentation will be required to qualify for an FHA loan. Borrowers must be able to provide proof of a social security number as well as original pay stubs, W-2 tax forms or other tax returns.

Property Requirements for FHA Loans

Not every home or property itself will automatically qualify for an FHA loans. There are several criteria a property must meet. First the property must be used for your primary residence, with at least one borrower on the loan living in the property within 60 days of closing. FHA loans are meant to help individual homeowners, not to enable property investment. That also means homes cannot be purchased with FHA funds and then be flipped. 

And of course, minimum property safety standards must be met and will be rigorously inspected during an FHA appraisal.

After meeting all these requirements, the final approval of an FHA loan is still at the discretion of the lender. Your odds of being approved will certainly be better if your credit score is higher and your debts are lower. Talking with a lender can also help you discover ways to be a better candidate for an FHA mortgage loan.

Do you want to find out if an FHA Loan is right for you? If so, contact PRIME 1 BANCORP, LTD at 630-519-5955 today and we can go over the best mortgage options for your particular situation.


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Prime 1 Bancorp, Ltd is not affiliated with any government organization or bank nor do we act on behalf of the FHA or VA. This material is not from HUD or FHA and has not been approved by HUD or a government agency. We are not a Federally chartered or State Chartered Bank. We are an we are an Illinois Residential Mortgage Licensee by the Office of Banks and Real Estate License #MB.6761138, a Colorado Registered Mortgage Brokerage by Division of Real Estate, a Florida Residential Mortgage Brokerage Licensed by the Office of Financial Regulation License #MBR1930 dba Prime 1 Mortgage Inc, a California CFL Licensed Mortgage Brokerage by Department of Business Oversights 60DB055973 and a Texas SML Licensed Mortgage Brokerage by the Texas Department of Savings and Mortgage Lending. Prime 1 Bancorp, LTD Corporate Office is located at 2720 S. River Rd Suite 50, Des Plaines, IL 60018 our Toll Free Number is 888-205-3737. NMLS: 1434638

Loan product availability is subject to qualification of the borrower and loan approval after full review of the file. Not every applicant qualifies or is eligible for every loan program. Some loan products may not be available in all states. Loan approval, note rate and annual percentage rate are dependent on factors including, but not limited to, credit, collateral, income, assets and overall financial history. Not all applicants will be approved for a loan. All loan programs, terms and annual interest rates are subject to change without notice. NMLS: 1434638