How To Qualify For FHA Loans
Mortgages insured by the Federal Housing Administration are available to home buyers who meet the criteria for this type of loan. Every mortgage has basic requirements. But FHA mortgages are flexible and buyers can qualify with lower credit scores and past credit mistakes.
620 credit score
Apply for a conventional loan with a non-FHA mortgage lender and you can not get it if your credit score is low in the 600 range. Mortgage lenders generally require credit scores of around 680 or higher. This is because buyers with this type of rating are less likely to default on the mortgage. In addition, higher ratings indicate good credit habits. FHA loans are slightly different. While buyers are only allowed two payments late by 30 days within two years, they can qualify for financing with a credit score as low as 620.
Answer Payment Requirements
Another feature of an FHA-guaranteed mortgage is that you only need a 5 percent down payment to qualify for the loan. This figure is significantly lower than the 20 percent decline required by traditional lenders. Some FHA mortgage lenders ask for 10 percent down if a borrower has a bad credit history. Meeting payment requirements is easier if selling another property. Otherwise, you can record this expense or consider withdrawing funds from a retirement account.
Proof of use
Despite lower payment and credit score requirements, applying for an FHA mortgage requires a job history and a regular income. Lenders who offer FHA mortgages review your employment history to make sure you stayed in the workforce for 24 consecutive months. Working a shorter time or having job gaps can delay the purchase of a home with an FHA lender. Post W-2, pay stubs or ask your employer to write a letter to your lender indicating your time with the company and your income.
24 months after credit reconstruction
Seizures and bankruptcies do not prevent the approval of FHA loans. However, there are provisions to apply for a mortgage after one or the other event. Even though you can rebuild your credit fast, FHA mortgage lenders need a two and a three year waiting period after a bankruptcy or foreclosure.
My house of eligibility for the FHA loan?
The Federal Housing Administration insures written mortgages against a variety of different types of property, including single-family homes, prefab homes and condominiums. In order to get a loan backed by the FHA, however, your home must pass a rigorous HAF evaluation. In addition, HAF has strict guidelines in place for the types of condos and mobile homes it funds.
HAF Approved Properties
You can use an FHA loan to finance one to four property units that are self-contained, semi-detached or townhouse units. The FHA ensures that the main residences, so if you use an FHA loan to buy a duplex you must live in one of the units. FHA appraisers inspect funded properties to monitor security risks and you must rectify any problem before closing the loan. Risks to safety range from cracked windows to faulty electrics. However, if your home needs major repairs, you can use a rehab loan for FHA to repair the property, in which case you can close on the loan before starting work.
You can finance your condominium with FHA loans if the condominium complex has received FHA approval. FHA does not guarantee mortgages on condos in buildings exceeding four storeys. In addition, the FHA ensures that condo loans if more than 50 percent of the complex’s units are owner-occupied and the FHA does not cover more than 10 percent of the condos in a complex at the same time. The same restrictions apply to a townhouse financing, unless the county documents describe your tow home as a single-family home, in which case condo restrictions are not applicable.
You can finance your home made with an FHA-backed loan, but only if your home was built after 1976. Prior to that date, less stringent building codes and, as a result, older homes do not meet FHA standards. You can not finance your home made with an FHA loan if it is in a special flood risk zone designated by the Federal Emergency Management Agency. The house must remain above the 100-year flood frequency elevation, which means it is high enough above the ground to avoid any damage from flooding that may occur in the next century.
The FHA does not guarantee commercial property and you can not use an FHA loan to finance your principal residence if you live in a fraternity or sorority house. In addition, the FHA imposes loan limits on home financing so that you can not use an FHA loan to buy or refinance a home, if the amount involved exceeds the FHA limits. The maximum amount of loan varies FHA from county to county, but a limit of $ 271050 applies in most areas.