FHA Guidelines On Down Payment Is 3.5% Down Payment

This Article Is About FHA Guidelines On Down Payment Is 3.5% Down Payment

The Federal Housing Administration has created the FHA insured mortgage loan programs to make the home purchases affordable to Americans.

  • FHA Loans are the most popular loan programs to home buyers, especially first time home buyers
  • Under FHA Guidelines On Down Payment home Buyers can purchase homes with 3.5% down payment
  • Under FHA Guidelines On Down Payment, to qualify for 3.5% down payment, buyers need at least a 580 credit score
  • Homebuyers with under 580 Credit Scores can qualify for FHA Loans, but 10% down payment is required under FHA Guidelines On Down Payment
  • HUD, the parent of FHA, has created and implemented lenient mortgage guidelines on FHA Loans than other mortgage loan programs
  • This is because Lenders are insured by HUD in the event Borrowers default on their FHA Loans
  • FHA Loans are guaranteed against losses by the United States Federal Housing Administration in the event Borrowers default
  • Lenders are able to offer FHA Loans to home buyers with 3.5% down payment and with less than perfect credit

FHA Guidelines On Down Payment And Mortgage Rates Florida

What are the FHA guidelines for advance payment 3.5% advance payment

FHA loan guidelines allow lenders to offer borrowers low down payments and lower credit scores than conventional mortgage loans.

  • The Federal Housing Administration insured mortgage loan program has helped millions of families become homeowners since FHA was created by Congress in 1934

The Federal Housing Administration is not a lender:

  • FHA does not originate mortgage loans
  • FHA insures the mortgage loan to HUD-approved mortgage lenders
  • There are various FHA mortgage programs
  • First time FHA Loans
  • FHA mortgage refinance loans
  • FHA streamline loans with no income verification, no credit scores, and no appraisal
  • 85% LTV Cash-out FHA mortgage refinance loans
  • FHA 203k Streamline Rehab Loans
  • Full Standard FHA 203k Loans
  • Reverse Mortgages

See if you qualify!

HUD Guidelines On Minimum Credit Scores

There are minimum credit score requirements to qualify for FHA Loans:

  • Most lenders require a minimum credit score of 640:
    • However, this is not an FHA Requirement but rather a lender overlay on credit scores
  • HUD Requires 580 FICO credit scores to qualify for FHA Loans with 3.5% down payment
  • Most of our borrowers have credit scores below 600 FICO
  • The lowest credit score is 580 for 3.5% down payment home purchase FHA Loans
  • Borrowers whose credit scores fall between 500 and 580, the minimum down payment required is 10%
  • Lower credit score borrowers with scores below 580 FICO  can still qualify with 10% down payment
  • Borrowers with lower credit scores should contact us so we can assist in preparing to improve credit

Owner Occupant Versus Second Homes And Investment Properties

What are the HUD guidelines for minimum credit scores?

There are three government loan programs:

  1. FHA Loans
  2. VA Loans
  3. USDA Loans

All government loans need to be owner occupant home loans. Second-home and investment property mortgages are conventional loans and/or investment portfolio loans.

FHA mortgage loan guidelines require that the home needs to be an owner-occupied home.

  • Second homes and investment homes do not qualify for FHA mortgages
  • HUD guidelines require that the property be 1 to 4 unit residential properties, single-family homes, townhomes, condos, and/or manufactured homes
  • As mentioned earlier, FHA guidelines require the borrower to put a down payment of 3.5% down payment
  • Down payment can be gifted by family members
  • Escrow accounts are mandatory on all government loans

The lender will collect taxes and insurance of home every month along with principal and interest payment and pay taxes and the insurance premium directly.

Other FHA Guidelines On Down Payment

Other HUD guidelines include borrowers have a two-year employment history.

  • Recent college graduates who just landed a job can qualify for FHA Loans
  • The time spent as a full-time college student will be counted towards the two years of employment history
  • Lenders prefer that the job is similar to the field of study in school
  • Most Lenders like to see a debt to income ratio of no greater than 43%
  • Again, the 43% is a Lender Overlay on DTI
  • Maximum debt to income ratio allowed is 46.9% DTI Front End, 56.9% DTI back end to get AUS Approval on FHA Loans

Non-Occupant Borrowers are allowed with FHA Loans.

FHA Mortgage Insurance Premium

What are the other FHA mortgage guidelines

Mortgage Insurance Premium is mandatory with FHA Home Loans.

  • Upfront mortgage insurance premium of 1.75% of the mortgage loan amount is a one time cost and is added to the mortgage balance
  • There is an annual mortgage insurance premium of 0.85% for the life of a 30 year fixed rate FHA Mortgage Loan
  • Majority of borrowers choose the 30-year fixed-rate mortgage loan program
  • 15 year fixed rate mortgage loan programs are available as well

If you have any questions on FHA insured mortgage loan programs, please contact us at Gustan Cho Associates at 1-262-716-8151 or text us for us faster response. Or email us at [email protected]

Related> FHA minimum credit scores guidelines

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Related> FHA Loan Requirements

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