June 26, 2017

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Articles in Category: FHA Requirements

FHA loan income requirements

FHA Loan Income Requirements

How much or how little can you earn and still qualify for an FHA loan? Do you know what the FHA loan income requirements are for the type of mortgage loan you seek? The truth is, the FHA home loan program does not specify a minimum (or maximum) dollar amount necessary to qualify for an FHA home loan or FHA refinance loan. Instead, the lender is required to make sure you qualify with FICO scores, credit history, and an acceptable debt-to-income ratio. FHA Debt To Income Ratio There are two ways your participating FHA lender will review your income compared to your financial obligations in order to qualify you for an FHA mortgage. The first is to review the amount of verifiable income you bring in and compare it to | more...

 
Low Down Payment FHA Loans

Low Down Payment FHA Loans

What is the key to low down payment FHA loans? The answer might surprise you, especially if you’re a first time home buyer. Getting a mortgage loan means (in most cases) that the borrower must budget and save for a down payment, but the amount of that down payment can vary quite a bit depending on the lender. For conventional loans you may find down payment requirements between five and 20 percent. But with FHA home loans, that amount can be as low as 3.5% of the adjusted value of the property. For FHA loan applicants who have FICO scores that may be considered “marginal”, that down payment requirement may be adjusted to 10%. Why the higher down payment? FICO scores. Believe it or not, your credit rating can be | more...

 
What is the average credit score needed to buy a house?

What Is The Average Credit Score Needed To Buy A House?

If you are a first-time home buyer, you’re likely asking a very common (and very important) question. What is the average credit score needed to buy a house? To get the answer, we decided to see what one of the three major credit reporting agencies, Experian, has to say on this subject. On the official Experian website, the answer to this question might surprise you: “There is no set minimum score to buy a house.” That’s right, you just read a direct quote from the official site of the credit reporting agency, Experian. But that statement does NOT mean there are no FICO score or credit score standards. Each lender has a set of credit score ranges it uses to determine creditworthiness. And many federally insured or guaranteed home loan | more...

 
Can You Refinance An FHA Loan To Get Rid of PMI?

Can You Refinance An FHA Loan To Get Rid Of PMI?

We’ve been discussing home loans, mortgage insurance, and the differences between FHA home loans and conventional mortgages. One common question that comes up when comparing FHA loans to non-FHA options? “Can you refinance an FHA loan to get rid of PMI?” The proper answer to this question is that FHA loans do not require PMI, also known as Private Mortgage Insurance. That does not mean the borrower won’t be required to pay for mortgage insurance, but for FHA loans this is an expense factored into the mortgage payment as part of the loan transaction. The borrower is required to make an FHA Up Front Mortgage Insurance Premium payment as part of closing costs (it can be financed into the loan if the borrower chooses) and make a monthly mortgage insurance | more...

 
Do I need mortgage insurance?

Do I Need FHA Mortgage Insurance?

In a recent blog post we discussed the differences between FHA mortgage loans and conventional home loans. One of the most important differences between FHA mortgages and conventional loans is the mortgage insurance requirement. Conventional loans may, depending on the size of your down payment and other factors, require the borrower to put as much as 20% down. Those who do not put a certain percentage down on a conventional mortgage may be required to carry private mortgage insurance (also known as PMI). FHA home loans, on the other hand, require a minimum 3.5% down payment and have no private mortgage insurance requirement. However, FHA mortgages do require the borrower to pay for mortgage insurance. This requirement includes an Up Front Mortgage Insurance Premium (UFMIP) and a monthly payment (MIP). | more...

 

Closing Costs And Earnest Money For FHA Loans

In a recent post we discussed FHA loan down payments and how the lender is required to verify that down payment money is coming from acceptable sources. Did you know the lender is also required to verify the sources of earnest money and funds to pay closing costs? It’s true-FHA home loan rules include requirements that these funds comply with FHA loan rules. For example, if your earnest money comes to you in the form of a gift, those gift funds must meet the rules and requirements of the FHA Loan Handbook HUD 4000.1 section titled Gifts (Personal and Equity): “Gifts refer to the contributions of cash or equity with no expectation of repayment.” This means your earnest money gift must never carry any strings attached. But that isn’t all-the | more...

 

The Down Payment Requirement For FHA Loans

FHA home loans, much like their conventional counterparts, have a down payment requirement. However, unlike conventional loans, the minimum down payment requirement for FHA mortgages is 3.5% of the adjusted value of the home. This lower down payment requirement is one of the main advantages of the FHA mortgage. The basic amount of the down payment varies with each FHA mortgage since the payment is based on the value of that particular home. Additionally, FHA mortgages require a specific FICO score range (580 or better) for maximum financing. Borrowers with FICO scores between 500 and 579 will be required to put down 10% instead of 3.5%. Additional lender standards may also apply. Calculating the amount of your down payment is only part of the process. FHA borrowers must provide down | more...

 
what is mortgage insurance and how does it work?

What Is Mortgage Insurance And How Does It Work?

“What is mortgage insurance?” is a common question for those new to the home loan process. Do you understand how it works? It helps to define the two things referred to by industry professionals as mortgage insurance. There is mortgage insurance which the borrower pays for as a requirement of the FHA loan, then there is the “mortgage insurance” referred to in FHA loan rules which is something else entirely. Note: What we are discussing here is not hazard insurance, which may be a requirement on some, but not all FHA loans. FHA Mortgage Insurance For The Lender The FHA single family home loan handbook, HUD 4000.1, refers to “mortgage insurance” when discussing the FHA’s role in insuring the loan to reduce the risk for the participating lender. On page | more...

 

How To Apply For An FHA Loan: The Paperwork You Need

In our last blog post we discussed how to apply for an FHA loan including issues related to credit and getting pre-approved for the loan. Getting ready for your mortgage loan application takes time-you need to have 12 months of on-time payments for your financial obligations leading up to the application, and you need to check your credit report to make sure you know what the lender will see at application time. But what is required when you actually start to fill out the paperwork for the mortgage? Credit, Employment, and Tax Data The lender needs a variety of information to approve your mortgage loan. That includes tax paperwork-anticipate the lender asking for at least two years of tax documents and have them ready at application time. Your lender will | more...

 
apply for an FHA loan

How To Apply For An FHA Loan

Do you know how to apply for an FHA loan? Getting an FHA mortgage is much like any other type of home loan when it comes to taking the same amount of time to prepare, examine and improve your credit rating, reduce your debt-to-income ratio, and other issues that can help with loan approval. Good preparation is the key to any home loan, even those that have more forgiving credit requirements such as FHA mortgages. Your lender will need to see proof that you are a good credit risk, have a stable and reliable form of income, and have an acceptable amount of debt compared to the amount of income you get each month. So how do you apply for an FHA loan? It is strongly advise that borrowers give | more...