What are the FHA Mortgage Requirements? Can an applicant with a low credit score apply for FHA mortgage loan? The people disappointed by the conventional loan also have a right to buy a house of their own. But the traditional loan requirements are nearly impossible to be fulfilled especially when you do not have an outstanding credit history. Here comes the FHA mortgage loan that enables the people with low credit scores to purchase a house. FHA mortgage requirements are not that difficult. President Franklin Roosevelt started the FHA mortgage loan as the part of the “new deal” to provide an opportunity for the low to middle-income Americans to own a house.
Today’s topic of discussion would be:
- FHA loan definition
- FHA loan income requirements
- FHA loan application
- FHA loan credit score
- Who can qualify for FHA loan?
FHA loan definition:
The loan that is insured by the Federal housing administration is called FHA mortgage loan. It is the loan that is quite popular among the first time home buyers due to the fact that it provides them an opportunity to purchase a house of their own even if they have a low credit score. As far as the traditional loan is concerned, you need to have an excellent credit history with a good credit score to obtain a loan. But FHA loan is to help the low-income Americans. The FHA approved lenders are allowed to lend money to the borrowers.
FHA insures the lenders against the loss that may occur if the borrower is not able to repay the loan amount. It indicates that the FHA does not directly lend money to the borrower. It ensures the lender who then gives money to the borrower.
FHA loan income requirements:
The people who are interested in borrowing FHA loan with a low down payment of 3.5% must have the FICO credit score of a minimum 580. The applicants who have a credit score below 580 are not excluded from the loan eligibility. Applicants with a credit score below 580 need to have a minimum down payment of 10%.
- The federal housing authority has set certain requirements that applicant must have to fulfill to apply for FHA mortgage. These include:
- The applicant must have a steady employment history.
- New FHA loans are for primary residence occupancy only.
- The applicant should have a valid social security number.
- He must be a lawful resident of the United States.
- The applicant must be of the legal age to sign a mortgage.
- He must get the help of an approved FHA appraiser for the property appraisal.
- The borrower must be out of bankruptcy and have a good re-established credit history.
FHA loan application:
More and more borrowers are applying for FHA loan these days due to the simple and straightforward process. It is making people with low income, and down payments enable to become the owner of a house. Well, it was not possible with a conventional loan when you do not have an impressive credit history. You can apply for FHA mortgage online as well. Download the application online, fill the form and sign it.
FHA loan credit score:
When the borrower knows he cannot get the conventional loan, then the best option is to apply for FHA loan. But I do not have an outstanding credit history. No problem, your credit scores are below 580 then you have to pay the 10% down payment. Your credit score is, or above 580 you only have to pay 3.5% down payment.
Who can qualify for FHA loan?
You are eligible to get an FHA loan if you have fulfilled all the certain requirements set by the federal housing administration. The approved FHA lender will be responsible for checking that you are a resident of United States and have the credit score required to apply for FHA loan. Also, the borrower must have a 12-month record of on-time payments of the financial responsibilities. If you fail to fulfill FHA mortgage requirements, then you will not be able to obtain the loan amount. FHA is helping people to become homeowners.