What are minimum FHA Home Loan Requirements?
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 against the mortgage loan that the home loan borrower has been granted by a private mortgage lender.
Federal Housing Administration: FHA
The Federal Housing Administration is a governmental agency that insures the mortgage loans to mortgage lenders against default and fraud. The Federal Housing Administration has its own rules and FHA home loan requirements that mortgage lenders need to adhere to in order to be insured by the FHA. The Federal Housing Administration has its minimum guidelines but the mortgage lender can set overlays that are more strict than the minimum FHA home loan requirements. A FHA insured loan is a great option for home buyers who do not meet the tougher conventional mortgage loan underwriting guidelines and for those who have had recent bad credit. It is a great program for first time home buyers as well.
What are the FHA Home Loan Requirements for 2013?
What are the FHA home loan requirements to get a FHA insured? A mortgage loan borrower needs to consult with a FHA insured and approved mortgage 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 mortgage loan 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 home loan borrower will qualify for is a one to four unit residential owner occupied property. By owner occupied, the home needs to be the mortgage loan borrower’s principal residence and cannot be a rental home or investment home.
FHA mortgage lending guidelines
The most basic FHA home loan requirements are that the mortgage loan borrower have a valid social security number, lawful resident of the United States, be of legal age, be employed for at least two years, have consistent income the past two years and show promising future employment, and meet minimum credit and debt to income ratio requirements.
The home loan borrower needs to apply for a mortgage application as part of the FHA loan requirement and state all of his income, asset, debt, and credit information. Other FHA loan requirement is the borrower must submit two years tax returns, two year W2s, recent bank statements, and other credit information like bankruptcy papers, divorce decree, child support, etc.
What else do I need to know about FHA home loan requirements?
There is a two year wait period from the discharge of a bankruptcy if the borrower has filed for bankruptcy. If the borrower had a 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 is quite lenient but most mortgage lenders have overlays when it comes to credit scores. Most mortgage lenders require a minimum of a 620 credit score.
Minimum credit scores to qualify for FHA Loan
I can qualify a mortgage loan borrowers with credit scores as low as 530. However, if your credit score is between 530 and 580, you would need to put 10% down payment. If you want to qualify for a 3.5% down payment loan, your credit scores need to be at least a 580.
Under 580 FICO credit scores
If your credit score is under 580 and you only have 3.5% down payment to put down on your new home, contact me at www.gustancho.com and I can help you repair your credit and improve your scores so you qualify for a 3.5% down payment FHA insured mortgage loan.
Debt to Income Ratios Requirements for FHA Loans
Most FHA mortgage loan lenders like to see debt ratio no greater than a 43% combined debt to income ratio. However, I have mortgage lenders that will take a 56.9% debt to income ratio.If you are looking for a California, Indiana, Texas, Illinois or Florida FHA loan or have questions on FHA home loan requirements, please contact me at here at my website at www.gustancho.com or email me at GustanCho@Outlook.com !
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