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FHA loans are one of the most common types of mortgages, especially for first time home buyers, and those without enough money available for a down payment. Backed and insured by the Federal Housing Administration, these loans allow borrowers to buy a home with a lower down payment and generous terms.

FHA loans are some of the easiest loans to qualify for, especially for first time homebuyers. But they do have several requirements. To qualify for an FHA loan:

  • You must make a minimum down payment of 3.5%.
  • You must meet the debt to income ratio requirement (43% in most cases).
  • You have the option of a 30 year fixed, 15 year fixed, or 5 year ARM loan.

These are the basics of the FHA loans
Keep in mind that lenders can make some judgments of their own. Although a 580 FICO score is required for an FHA loan, most lenders do require at least a 620 credit score. Many lenders will also accept a credit score below 580 with a compensating factors.

In addition to the above qualifications, FHA loans have limits, and these limits are set by the county. In some counties, FHA loans are limited to $275,665. In other counties, it is as high as $636,150. FHA looks at the local cost of living in the county to determine how high its limits should be.

You can find the FHA loan limits for your county by searching the US Department of Housing and Urban Development (HUD) County Search.


What You Need to Qualify
To qualify for an FHA mortgage, you’ll be required to supply the following documents:

  • A two year employment history.
  • Two years of income statements (W-2s, 1099’s, etc.)
  • Credit information
  • Any cosign information
  • Your social security card, and a green card/work permit if applicable.

    You may also be asked to provide any bankruptcy information (if applicable), and any self-employment information, including two to three years of tax history.

Qualified Housing
Only certain types of housing qualify for an FHA loan, but most traditional homes qualify. For example, single family homes, townhouses, manufactured homes, and multi-family properties of four units or less (provided they are owner-occupied) can all qualify for FHA loans.

Other Items of Note
In addition to the above qualifications, FHA loans have some requirements that you may need to consider. All FHA loans require annual mortgage insurance of 0.25%, and upfront mortgage insurance of 1.75%. All payments must be made into an “impound account,” which is an account run by the lender that pays for property taxes and home insurance.

Contact Me Today
FHA loans are one of several low-down payment options available for home buyers. Our loan originators are ready to run the numbers and figure out both what you qualify for and what will provide you with the best possible rate for your purchase. For more information, contact me today! 

 

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