FHA Home Loan Requirements And Guidelines Florida And Illinois


This BLOG On FHA Home Loan Requirements And Guidelines Florida And Illinois Was UPDATED On December 4th, 2018

What are FHA Home Loan Requirements And Guidelines Florida And Illinois

When we talk about FHA home loan requirements, we’re not exactly talking about a mortgage loan.
  • It is the Federal Housing Administration, also known as FHA, insuring lenders if borrowers default on their FHA Loans
  • FHA is a government agency under the U.S. Housing and Urban Development (HUD) 
  • FHA is not a lender
  • FHA role is to insure home loans that meet HUD Guidelines to banks and lenders that originate, fund, and service home loans
  • These loans need to meet all of FHA Home Loan Requirements in the event the homeowner with the FHA home loan defaults on their loans and the lender loses money
  • Due to the government guarantee, most lenders aggressively want to lend to homeowners who need FHA Loans
  • This because in the event if the loan defaults, it is insured, thus, minimizing the risk to the lender

In this article, we will discuss and cover FHA Home Loan Requirements And Guidelines.

Federal Housing Administration: FHA

The Federal Housing Administration is a governmental agency that insures mortgage loans to mortgage lenders against default.
  • The Federal Housing Administration has its own rules and requirements that lenders need to adhere to in order to be insured by HUD
  • The Federal Housing Administration has its minimum guidelines
  • The mortgage lender can set overlays that are more strict than the minimum FHA home loan requirements
  • An FHA insured loan is a great option for homebuyers who do not meet the tougher conventional mortgage loan underwriting guidelines
  • It is a great loan program for those who have had recent bad credit

It is a great program for first time home buyers as well.

What Are FHA Home Loan Requirements?


What are the FHA home loan requirements to get an FHA insured?
  • Borrowers need to consult with the lender and be able to have a 3.5% down payment
  • The down payment needs to be documented as of where it was derived
  • Gifts from family are allowed
  • The borrower will qualify for a 96.5% FHA home loan plus closing costs
  • Closing costs can be paid by the borrower
  • Or the seller can contribute up to 6% of the purchase price to help the borrower paid closing costs
  • The lender can assist with the closing costs as well for a higher interest rate
  • The property the borrower will qualify for is a one to four-unit residential owner-occupied property
  • By owner-occupied, the home needs to be borrower’s principal residence
  • Cannot be a rental home or investment home

Changes On FHA Guidelines

What are the changes in the FHA guidelines

The FHA home loan requirements are the following:
  • Borrowers must have a valid social security number
  • Be a lawful resident of the United States
  • Show two-year residential history
  • Be of legal age
  • Be employed for at least two years
  • Show two years of employment history
  • Show that they have consistent document income
  • Provide promising future employment with a consistent income to be able to pay for their new FHA Loan
  • Meet minimum credit and debt to income ratio requirements
  • The borrower needs to apply for a mortgage application as part of the FHA loan requirement

Need to state all of his income, asset, debt, and credit information.

Documents Required To Start Mortgage Process

Other FHA loan requirement is the borrower must submit the following docs:

  • two years tax returns
  • two year W2s
  • recent bank statements
  • other credit information like bankruptcy papers, divorce decree, child support, etc.

Other FAQ About FHA Home Loan Requirements


Homebuyers can qualify for FHA Loans with bad credit, prior bankruptcy, prior foreclosure, prior deed in lieu of foreclosure, prior short sale, outstanding collections, outstanding charge off accounts. Borrowers can qualify for FHA Loans during a Chapter 13 Bankruptcy Repayment period.

  • There is no waiting period after a discharged date of a Chapter 13 Bankruptcy to qualify for FHA Loans
  • There is a two year wait period from the discharge of a Chapter 7 bankruptcy if the borrower has filed for bankruptcy
  • If the borrower had home foreclosure, then there is a three year waiting period from the date of the sheriff’s sale or the date the deed of the home was transferred out of the homeowners’ name
  • FHA home loan requirements on credit scores are quite lenient
  • Most lenders have overlays when it comes to credit scores
  • Most lenders require a minimum of a 620 credit score

The Team at Gustan Cho Associates are loan officers who are experts in originating and funding FHA Loans with no Overlays.

Minimum Credit Scores FHA Home Loan Requirements

What are the requirements for an FHA home loan

To qualify for a 3.5% down payment loan FHA Loans, credit scores need to be at least 580.

  • However, borrowers with a credit score are between 500 and 580 can qualify for FHA Loans with automated underwriting system approval:
    • This holds true as long as they have 10% down payment

Gustan Cho Associates will only go by AUS FINDINGS and has no Lender Overlays.

FHA Home Loan Requirements On Under 580 Credit Scores


If your credit score is under 580 and you only have a 3.5% down payment to put down on your new home, contact us at Gustan Cho Associates. Our team of licensed and/or support personnel can help you repair your credit and improve your scores so you qualify for a 3.5% down payment FHA insured mortgage loan.

FHA Debt to Income Ratios Requirements

Most lenders like to see debt ratio no greater than a 43% combined debt to income ratio.
  • However, most lenders have overlays on debt to income ratios
  • FHA Guidelines On Debt To Income Ratio allows up to 56.9% debt to income ratio
  • This holds true as long as the borrower has credit scores of at least 620 FICO

Home buyers who need a loan officer who specializes in originating FHA loans with no lender overlays or have questions on FHA home loan requirements, please contact us at 262-716-8151 or text us for faster response. Or email us at gcho@gustancho.com.

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