How to Qualify for an FHA Loan

How to Qualify for an FHA Loan

How can I qualify for an FHA Loan?

To determine if you qualify for an FHA Loan, we will look at:

Income Qualifications - Your income and your monthly expenses. Standard FHA Loan Qualification debt-to-income ratios are 31/43. These ratios may be exceeded with compensation factors. Your income before taxes will be used to determine how much you can qualify for.

Credit Qualifications - Your credit history (this is important, but FHA's credit standards are flexible). A 620 FICO credit score is required to obtain an FHA approval through ENG Lending.

Current FHA Loan Qualifications state that your monthly housing costs (mortgage principal and interest, property taxes and insurance) must meet a specified percentage of your gross monthly income (31% ratio). Your credit background will be fairly considered. You must also have enough income to pay your housing costs plus all additional monthly debt (43% ratio). These percentages may be exceeded with compensating factors.

Can I get an FHA Loan after bankruptcy?
Criteria for FHA loan approvals state that if you have been discharged from a Chapter 7 bankruptcy for two years or more, you are eligible to apply for an FHA Loan. If you are in a Chapter 13 bankruptcy and have made all court approved payments on time and as agreed for at least one year, you are also eligible to make an FHA loan application.

What is the maximum amount that I can borrow?

The maximum loan amount under today's FHA Loan Qualifications is determined by:

Maximum FHA loan amount: By law, FHA Lenders cannot insure loans that exceed certain amounts based on the metropolitan area or county in which you live. The highest maximum FHA mortgage right now is $729,750. The lowest FHA lender maximum amount available in any county is $271,050. To see what the limit is in the county in which you're interested, visit the following site https://entp.hud.gov/idapp/html/hicostlook.cfm. This site lists U.S. territories as well as states.

Maximum FHA Financing: Depending on the state where the property is located, FHA Loan Qualifications state that the maximum financing will be 97.75% of the lower of the purchase price, the appraised value of the home or the amount you are refinancing plus closing costs. If you are refinancing and taking cash out, the loan will be limited to 85% of the appraised value.

Why choose an FHA Loan?

FHA House Loans require a low 3.5% down payment.
Non-occupant, co-borrower are permitted by FHA Loan Requirements.
FHA Loan Underwriting guidelines use expanded qualifying ratios.
There are no pre-payment penalty requirement for an FHA Housing Loan.
FHA Insured Loans carry low fixed interest rates.
FHA Loan Guidelines have lower MI premiums.
An FHA Loan Program is eligible for non-credit qualifying, streamline refinance.
A HUD FHA Loan is available all areas of the country, provided a market exists for the property and the home meets HUD's minimum property standards and the price is below the Maximum FHA Loan amount for that area.
You can get an FHA Loan to purchase or refinance a new or existing one to four family home in urban and rural areas.
FHA Fixed-Rate Loans are offered at terms of 15 or 30 years.

FHA Loan FAQ'S

What is an FHA Loan?
An FHA loan provides low-cost insured home mortgage loans that suit a variety of purchasing and refinancing options.

What are FHA Loan Limits?
Today's maximum FHA Loan Limits are determined by the area where the subject property is located.

How can I qualify for an FHA Loan?
You must obtain correct FHA Loans Information to determine if you could qualify for today's FHA Loan Insurance guidelines. Certain FHA Loan Credit Score and FHA Loan Income guidelines must be met.

What are current FHA Loan Fees?
The FHA has a list of allowed fees that can be charged to the borrower on FHA Loans. These fees are referred to as allowable closing costs, and can vary from lender to lender. The FHA Loan MIP (Mortgage Insurance Premium) amounts to 1.75% of the loan amount and in usually financed in the mortgage.

Do FHA Loans have Mortgage Insurance?
FHA Loans have Monthly Mortgage Insurance on loans with a term of greater than 15 years and a loan-to-value ratio of 90% or greater (meaning you are borrowing more than 90% of the value of the home). FHA Mortgage Insurance (MI) is not considered FHA Loan PMI, because it is not provided by a private mortgage insurance company like on Conventional Loans. When comparing the monthly mortgage insurance rates on FHA Loans vs Conventional Loans PMI, the FHA MI Rates are usually better.