The current Federal Housing Administration (FHA) loan standards are available in a thousand-page handbook presented by the U.S. Department of Housing and Urban Development.
Here’s a fast rundown on requirements and qualifications:
FHA Mortgage Down Payment
A fundamental requirement in obtaining an FHA-backed up mortgage is one’s credit score. Potential applicants should make sure their FICO scores are 500 or better. Getting even just the base requirement is enough to let you in the door, but having only that will give you the bottom end of the deal. Those whose FICO ratings are below 580 can still be granted an FHA mortgage but will need to put in a 10% down payment. Applicants whose credit scores are 580 or higher can make the lowest possible down payment, which is 3.5% of the home’s appraised value.
Salary Level Requirement
Under the FHA, no minimum and/or maximum income can better or hinder your chances of an approval. At the same time, potential borrowers must have, at the very least, two running credit accounts. On top of that, applicants must also not have government debts or tax-related issues. As long as one has been employed under the same employer for two years up until the date of application, the applicant has a strong chance of making it. Should this not be the case, an arrangement can be made as long as the applicant can prove that he or she is financially able to take on a mortgage that will last for years.
A debtor’s collective debt-to-income scale—new mortgage, monthly bills, and other recurring debts included—must not exceed 50%.
FHA Property Standards
On top of debtor criteria and eligibility, the debtor’s chosen house must also reach very specific standards before an applicant is given the green light for an FHA mortgage. Having established that, investment properties are not qualifiable, the property at hand should not be a ‘flip’, the borrower must assume the title to the property under his or her name, and the home must be his or her primary residence.
- Names and location of your employers (past two years)
- Gross monthly salary at your current job(s)
- Pertinent information for all checking and savings accounts
- Pertinent information for all open loans
- Complete information for other real estates you own
- Approximate value of all personal property
- Certificate of Eligibility and DD-214 (for veterans only)
- Current check stubs and your W-2 forms (past two years)
- Personal tax returns (past two years), current income statement and business balance sheet for self-employed individuals
In general, the FHA is designed for those who might find it extra difficult to obtain conventional mortgages because of stricter loan policies and higher demanded credit scores. The FHA is the perfect alternative for those who don’t exactly have hard cold cash or for those whose finances aren’t exactly at tip-top shape yet.
For more FHA eligibility requirements, click the link to be routed to the leading FHA lenders!