FHA Loan Requirements
FHA Loan Requirements
Important FHA Guidelines for Borrowers
The FHA, or Federal Housing Administration, provides mortgage insurance on loans made by FHA-approved lenders. FHA insures these loans on single family and multi-family homes in the United States and its territories. It is the largest insurer of residential mortgages in the world, insuring tens of millions of properties since 1934 when it was created.
- FICO® score at least 620 = 3.5% down payment.
- FICO® score between 620 = 10% down payment.
- MIP (Mortgage Insurance Premium ) is required.
- Debt-to-Income Ratio < 43%.
- The home must be the borrower’s primary residence.
- Borrower must have steady income and proof of employment.
An FHA Loan is a mortgage that’s insured by the Federal Housing Administration. They allow borrowers to finance homes with down payments as low as 3.5% and are especially popular with first-time homebuyers.
FHA loans are a good option for first-time homebuyers who may not have saved enough for a large down payment. Even borrowers who have suffered from bankruptcy or foreclosures may qualify for an FHA-backed mortgage.
Do FHA loan requirements apply to all borrowers? This question is complicated depending on whether you’re asking about credit requirements, appraisal rules or other areas.
One important area where all FHA borrowers are intended to get identical treatment is in the application of Fair Housing law standards. No discrimination is permitted in the FHA home loan process, and those who do experience some form of it should report the incident immediately to the FHA/HUD.
You cannot be rejected for an FHA home loan on the basis of factors that have nothing to do with your financial qualifications, employment, income, being an owner/occupier, etc. A home may not be suitable for an FHA loan, a borrower may be denied the loan because he or she doesn’t intend to live in the property as the primary residence, or because of factors that affect the economic life of the property.
Where basic minimum credit standards are concerned, FHA loan rules apply for all borrowers. If you apply for a new purchase mortgage, there are basic requirements will affect your transaction including FICO score rules, down payment requirements, and the basic terms of your mortgage. But the nature of your transaction will play a role in this area, too.
For more information call Abdi Mohammadian NMLS # 356391 at 925-785-7851.