It’s the American dream… to own your own home. But due to limited financial resources or less-than-perfect credit, some of us might not qualify for a conforming loan. FHA loans are mortgages insured by the Federal Housing Administration (FHA). As such, homebuyers who apply for an FHA-insured home loan tend to have a much have an easier time qualifying for a mortgage.
Most FHA loan applicants are either first-time home buyers or home buyers with less-than-perfect credit. Prior to October of 2010, the FHA did not have a minimum credit score requirement in order for applicants to qualify for a mortgage. As of October 2010, the FHA now requires applicants to have a credit score of 580 or higher. Despite this low number, most lenders won’t lend to an applicant with a credit score below 620. At Homerica Mortgage Corporation, we’re only a phone call away. Call us today at 877-451-3100. We can provide you with advise and assistance on improving your credit so that you’ll be on your way to home ownership via an FHA loan.
For more information on credit, please see our About Credit page. If your credit score is low, please see our How to Improve Your Credit page. Please also see our FAQs page, in the FHA Loan section for more list of common questions on FHA mortgages. Additional information can be found at the U.S. Department of Housing and Urban Development.
FHA Loan Benefits
FHA-insured mortgages have the numerous benefits:
- Because they’re backed by the federal government, it’s easier to qualify for an FHA loan.
- FHA loans have a low down payment requirement of only 3.5% down. Not only that, but the 3.5% can come in the form of gifts.
- Applicants with less than stellar credit have an easier time qualifying for these FHA-insured loans.
- FHA-insured loans typically have lower interest rates than most traditional mortgages making homeownership more affordable.
- Once approved for an FHA mortgage, homeowners can get help keeping their homes during hard times. The FHA works with its recipients to help them keep their homes from falling into foreclosure.
Required Documents for an FHA Loan
Help us expedite your FHA loan. Please have the following documents and information ready when you apply for your FHA mortgage.
- Your completed tax returns for the last two years.
- Your W-2s from the last two years.
- Your most current pay stubs from the last 30 days.
- If you are self-employed, you will need your business tax returns from the last two (2) years.
- Your full bank statements for all of your bank accounts for the past two (2) months.
- Your most recent statements from all of your retirement accounts, 410ks and/or IRAs.
- Your driver’s license or some other form of official photo identification.
- A copy of your social security card.
- If you are divorced or separated, we will need a copy of your divorce decree or separation agreement.
- If you are receiving income from child support and/or alimony, and you wish to use this income to qualify, we will need documents showing that you have received this child support and/or alimony income for the preceding twelve (12) months and that it will continue for the next 36 months.
- If applicable, we’ll need a copy of your green card or work-permit.
The qualifications for an FHA loan are as follows:
- Proven employment for at least two (2) years.
- Either steady income or increased income over the last two (2) years.
- A credit score of 620 or higher. A credit score of 580 can be considered with compensating factors.
- If you have ever filed for bankruptcy, you won’t qualify for an FHA mortgage for at least two (2) years from the discharge date and have re-established good credit.
- Foreclosure? You’ll have to wait at least three (3) years since your most recent foreclosure.
- How much can you afford? Your total monthly obligations should not exceed 43% of your gross monthly income. However debt ratios above 50 to 60% of your gross monthly income are considered on a case by case basis.
- You will need to make a minimum downpayment of at least 3.5%.
- The seller may contribute up to 6% of the sales price toward the closing costs and other pre-paid items.
- Not all types of properties qualify for FHA loans. Eligible properties include 1 to 4-family homes and FHA-approved condominiums.
- The property that you purchase must be your primary residence.
- For refinance transactions:
- no cash-out/rate & term up to 97.75% of appraised value.
- cash-out refinances up to 85% of appraised value.
Apply now or call us today at 877-451-3100.