Many people dream of buying their own home but are intimidated with the current market trends or do not believe they will qualify for a home loan. Knowing what the FHA loan requirements are can often help make that dream come true. Many people can qualify for this type of home loan and make the dream of owning a home into a reality.
Most lenders will require at least a 620 FICO score to qualify but many will allow as low as 500. If your score is below a 620 and you can show factors or reasons for the lender to look past your lower credit score they will. Also, it will help if you have some money in savings, have a good history of making mortgage payments on time in the past or make more than enough money to qualify.
If you have a current mortgage, you must have paid on time for at least 12 months. However, if you have been late, provide a signed letter with an explanation. It is also required to have at least 3 open lines of trade that have been active for 24 months.
Proof of income and employment are also requirements. You will be required to submit a copy of the past 2 year’s tax returns and a few pay stubs showing the same employer. If you are self employed, you will have to submit your tax returns for the past 2 years and they must show you have been in the same business during that time.
Your dept to income ration must also be at the very least 40/50. What this means is your mortgage, homeowners insurance, property tax and all revolving debt has to be less than 50% of your gross monthly income. Your chances of qualifying for the loan are better if the ratio is lower.
A FHA lender will require a minimum of 3.5%, which is much less than conventional lenders. The down payment can be a gift from family or employer. When that is the case, the funds must be verified and have been in a person’s bank account for at least 60 days.
Choose a house that does not have any issues such as flooring that is not finished or roofs that leak because the appraisal is stricter. The appraisal must also be completed by a FHA approved company that is also HVCC compliant. Read more about: fha loan requirements
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