June 20, 2023
We get many reader questions about FHA home loans. A common variation on one such question goes like this: “What qualifications are needed to be approved for an FHA home loan?”
We get questions like these quite often. Some people mistakenly assume that FHA loans are only for first-time home buyers or those with lower incomes.
This is not true; any qualified FHA loan applicant may be approved for an FHA mortgage. This is true regardless of whether the applicant has purchased a home before, has an income above or below a certain threshold, etc.
If the borrower can realistically afford the loan and meet the other lender and FHA requirements, loan approval is possible.
There is no minimum or maximum income level for FHA loans–instead, the lender will measure a borrower’s debt-to-income ratio, review credit scores, and other financial qualifications.
Expect to be in the job market for 24 months or more for best results. Those 24 months do NOT have to be with the same employer.
A borrower with a 580 or better FICO score is technically eligible for maximum FHA loan financing, though a lender may have a higher standard. You should expect to compare lenders to see who can make you the best offer based on your FICO scores and other credit data.
You should expect your lender to review your debt-to-income ratio. If your outgoing debt takes up 50% of your income or more, consider working on lowering that number well in advance of applying for a mortgage. The lower your debt ratio, the better off you’ll be at loan application time.
The process to get started on an FHA loan is similar to any other type of home loan, except in this case the borrower will need to find a lender who participates in the FHA program to apply for the FHA loan.
The borrower will search for a suitable house, make an offer to the seller, apply for the loan and go through all the other usual steps to getting a home loan.
Borrowers should ask sellers to agree to a contingency clause stating the sale is dependent on the outcome of the inspection and appraisal. Some borrowers hire a lawyer during this process, some do not, it’s up to you based on your comfort level with your first mortgage or applying for one after a long period.
Borrowers who need help preparing or understanding the home loan process can call the FHA directly at 1-800 CALL FHA to request a referral to an FHA/HUD-approved housing counselor for advice and assistance.
You can get advice about pre-loan financial planning, credit requirements, and how to prepare to be a new homeowner.
Contact your local government (look at the state government or municipal government official site) to learn if there is a down payment assistance program that might offer you help with your down payment and/or closing costs.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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