FHA Loan Requirements

Since 1934 the US Federal Housing Administration Department (FHA) has been helping Americans afford to buy new houses and realize the dream of homeownership. They have done this by extending benefits to low and middle-income families who would otherwise not be able to qualify for a conventional loan. There are some requirements, but they are much more relaxed than with conventional loans, so even if you have low or no credit, it is still possible to qualify for an FHA insured loan. Here are some of the requirements you will need to be aware about before you get started on the loan process.

Credit

All loans require a credit check on the borrower, and the FHA is no different. You credit score is a basic history of your financial past, and an indicator of how well you will be able to make payments in the future. While most conventional loans require that you have a strong score to qualify for a loan, the FHA is much more lenient. Even if you have no credit, it is still possible to qualify for a loan if you have a co-signor who has credit, even if they are not planning to live in the house.

Income

Your income level will be taken into account when applying for an FHA Loan. Even though the FHA is there to help low and middle-income families, they need to know that you will still be able to afford your monthly and annual payments.

Debt to Income Ratio

Your debt-to-income ratio takes into consideration your monthly or annual salary, and then subtracts your debts such as car payments, tuition, credit cards, etc. This number is a true representation of how much money you have left at the end of each month and how much you are then able to afford for mortgage payments.

Refinancing

If you decide to refinance your loan, you have the option of rolling the costs of the repairs to the house or energy efficient improvements to the house into the new loan. As with a typical FHA Loan, you will need to qualify for the refinanced loan based on your income, credit score and debt-to-income ratio.

Get Started Today

Even if you are not sure if you can meet the standards for an FHA Loan, you can still fill out a short form and get pre-qualified for a loan today. Pre-approval has never been easier!

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