FHA Home Loans

FHA Loans are a great choice for several different types of borrowers, especially for first time home buyers.  One of the reasons that FHA loans are so popular is because of the low down payment option for purchasing a home. FHA loans allow you to buy a home with only a 3.5% down payment.

Another reason for the widespread popularity of FHA loans is the requirements to qualify are much less strict than they are for conventional mortgages. Why is this the case? The FHA is a government agency that insures home loans which allows for mortgage lenders to issue loans to borrowers that might otherwise be turned down for a conventional mortgage.

FHA Loan Requirements – How Do You Qualify for an FHA Loan?

It is easy to see if you are eligible for an FHA loan.  If you would like to find out if you qualify for an FHA loan, please request a free consultation.  You may also view some basic FHA loan requirements below.

• Credit Score – To qualify for the 3.5% down payment, you must have a 580 credit score or higher. If your credit score is between a 500-579, you still may qualify for an FHA loan, but will be required to put 10% down.
• Down Payment – FHA loans are widely known for a combination of reasons, but largely for their easy qualification guidelines and low down payment option. A first time home buyer can purchase their first home and only have to pay a 3.5% down payment. So if you wanted to purchase a home for $200,000, this amount would be $7,000!
• Owner Occupied: You must occupy the home as your primary residence. The FHA does not insure loans for investment properties, second homes, or vacation homes. You must occupy the home yourself in order to be eligible for FHA financing.
• FHA Mortgage Insurance – All FHA loans require that mortgage insurance be paid. There are two mandatory types of FHA mortgage insurance applied to all FHA loans nationwide. This includes the FHA Upfront Mortgage Insurance Premium (UPMIP) and the monthly FHA Mortgage Insurance Premiums (MIP). You can calculate how much mortgage insurance will cost with this FHA insurance calculator.
• Job History / Income – Showing stable job history, especially in the last 2 years is necessary. You must show that you have the financial ability to repay the loan. This includes full-time work, and enough income to be able to afford the new mortgage payment. One of the primary underwriting considerations is the ratio of your debt-to-income (DTI). Lenders like to see a maximum of ratios of 43% DTI ratio. This is calculated by taking the total amount that the new mortgage payment would be, along with other debts such as auto loans and credit cards. It is then compared against your monthly income to calculate your DTI ratio.

Have more questions about FHA Loans? You can view some of the most frequently asked questions below.  Or if you would like to speak with an FHA loan representative, please request a free consultation.

Frequently Asked Questions About FHA Loans

Are FHA loans only for first time home buyers?
No, FHA loans are not only for first time home buyers.  You can be a repeat home buyer, and still get approved for an FHA loan.  You can be a second time home buyer, third time home buyer, it does not matter how many times you have owned a home before in the past.  However, you may only have one FHA loan at a time.

Can I buy an investment property with a FHA loan? 
FHA loans are only available for primary residences.  They are NOT available to finance an investment property, second home, or vacation home.

What are FHA loan limits?
The FHA loan limits are the maximum amount that you may borrow using an FHA loan in a specific location (and the number of units a property has).  To view the FHA loan limits in your county, please visit the HUD loan limit search page.

Are there any income limits on FHA loans?
No, there are not any limits to how much money you can make.  The only factor your income plays is in your debt-to-income ratio, and what appears to be your ability to repay the loan. If you have a lot of other debts, or too little income to make the payment for the loan you seek, then you might be denied. The ratio of your debt-to-income should not exceed 43%.

Are there any zero down payment options for FHA loans?
There are no 0 down payment FHA loan programs that exist. No lenders offer this since the FHA requires a minimum of a 3.5% down payment. The good news though, is the FHA allows for down payments to be borrowed, gifted, or received from a down payment assistance program.

What documentation is needed for a FHA loan?
All of the standard documentation that is needed for any mortgage is needed for a FHA loan.  This includes pay stubs, bank statements, job verification, tax returns, and whatever other information/conditions the loan underwriter deems necessary for your loan to be processed.

Do FHA loans allow cosigners?
Yes, FHA loans allow you to have a cosigner for your home loan. A cosigner is not the same thing as a co-borrower. A co-borrower shares the same rights and obligations as you. A cosigner simply is just signing on to help you qualify, but does not have the same property rights. However, they do have the same financial responsibility to pay the mortgage payments, otherwise defaulting on the loan will have adverse affects to their credit (as well as yours). This would include late payments or a foreclosure in the event of serious delinquency.