FHA Loan Requirements for Purchase and Refinance

If you do not typically fit the requirements for most home mortgage loans, you may still be eligible for an FHA loan.  This program serves to help lower-income people, first-time home buyers, and people with less-than-perfect credit achieve their goal of home ownership.

FHA mortgages have become more and more popular because of their lower down payment requirements than most loans.One of the reasons that FHA loans are so popular is that they are low down payment requirements. As of right now, the current down payment requirement is 3.5% of the sales price of the home. Most conventional loans require anywhere from 5-10% of the sales price as the loan amount.

That is why FHA mortgages are so popular for first-time home buyers.They are able to get into a property for a lower out of pocket expense.

Eligibility Requirements for FHA loans

  • You may only have one FHA home mortgage loan at a time.
  • You have to be able to make a 3% down payment, some or all of which can come from gifts.
  • Your monthly payments must be about 30% of your income, due to a higher debt-to-income ratio than conventional home mortgage loans.
  • Some credit history is required, though the FHA accepts such evidence of debt responsibility as cell phone bills and utility bills.
  • You must have 2 years of income stability and prove that you have paid most of your bills on time.
  • Late payments in the past will not disqualify you from taking out a home mortgage loan.  The FHA will overlook some late payments if your overall history shows that you usually make your payments on time.
  • Any judgments against you must be paid before closing an FHA loan.
  • The FHA may overlook any items you have in collections if your credit history meets their requirements.
  • Any delinquent debt owed to the federal government (such as tax liens or student loans) will make you ineligible for an FHA loan.
  • You must have 12 months of good credit after any past Chapter 7 bankruptcy.
  • You must have 1 consecutive year of good credit after any past Chapter 13 bankruptcy, in addition to your adherence to the payment plan.
  • You must have 3 consecutive years of good credit after any past foreclosure.
  • The FHA offers Self-Employed Income Mortgage Loans to the self-employed, who may have trouble proving steady income.
  • You can transfer an FHA loan on to a buyer or assume it from a seller, with the permission of the FHA.
  • The VA offers veterans a similar, though in some ways superior, home mortgage loan program.  To find out if you qualify, or to check out the benefits of the VA loan, check the VA website.

In addition to personal qualifications, the FHA has a set of property standards that must be met in order to purchase with your home mortgage loan:

  • You must intend to live in the property.
  • Commercial properties and cooperatives are not eligible for an FHA loan.
  • Single family homes, small rental properties (up to 4 units), manufactured homes, modular homes, and condos may qualify.
  • The property does not qualify if the seller has acquired the property within the last 90 days.
  • If the home is more than 1 year old and you would like to make improvements up to $5,000, then you may qualify for a 203(k) loan. This type of FHA home mortgage loan is used to purchase and remodel a home.

Other FHA Loan Guidelines and Requirements

So, there are a few requirements that you want to know about FHA loans. First of all, each area has different FHA home loan limits. So, you will want to see what the limit is for your area.

You will also want to know what the FHA loan ratios are going to be. When underwriters look at your financial situation, they are going to see what the ratio is between your income and your debt. I can show you how to calculate that and what the ratios are going to be.

Want to know what to expect for the FHA loan closing cost? I will give you a breakdown of the fees and give you an estimate of how the costs work.

There are a lot of people who are trying to rebuild their credit after bankruptcy or foreclosure. Let me tell you what the requirements are for an FHA loan after bankruptcy.

Are you wanting to do some home repairs or are you buying a property that needs some work done to get it in shape? There is a special 203K FHA loan for cases like that where you can also finance money for the repairs. Come learn the specifics of this program and what the FHA loan requirements are for this program.

Based on all the information, are you ready to apply? You can apply FHA loan here and get started on buying or refinancing your home.

If you are interested in refinancing, there is a special FHA loan called the FHA streamline program. This particular program does not require an appraisal and is perfect for people who want to capitalize on lower rates but their property values have declined.

FHA home loan refinancing can also be done if you want to pull cash out of your property, or combine multiple loans for a lower rate.

These details on FHA loan requirements will give you the information that you need to know. Enjoy!