August 20, 2019

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FHA Home Loan Basics: Who Qualifies?

FHA Home Loan Basics: Who Qualifies?

Are you looking for a home loan? Do you want to buy a home with a mortgage loan in 2019? The FHA Single-Family Home Loan program offers a wide variety of options for qualifying borrowers, but some future home owners make the wrong assumptions about FHA mortgages. How much do you know about this important home loan option?

FHA Home Loans Are For Any Financially Qualified Borrower Regardless Of Past Home Ownership

If you have applied for a home loan in the past, owned a home before, or are a current home owner, you are not excluded from consideration for an FHA mortgage under the rules of the FHA program. This is true of all FHA mortgages including One-Time Close construction loans, FHA condo loans, and FHA mortgages for multi-unit properties.

Lender requirements will vary, and you may find a participating FHA lender willing to offer you first-time home buyer incentives. But keep in mind that this is the lender’s choice and any first-time home buyer preference you receive is the result of the lender’s efforts rather than the nature of the FHA loan program itself.

FHA Loans Are Possible Even If You Have A Bankruptcy, Foreclosure, Or Short Sale In Your Credit History

FHA loan rules say that a mandatory seasoning period applies in cases of bankruptcy, short sale, foreclosure, etc. But once your bankruptcy is discharged or the home has been transferred legally out of  your name, the clock begins ticking on that waiting period. Once it is over (one to three years depending on circumstances, lender requirements, and other factors) you can begin the FHA loan application process.

Remember that the seasoning period does not begin when the bankruptcy or other proceedings are initiated, but rather after they have been discharged or otherwise satisfied.

FHA Loans Feature Low Down Payments AND No Penalty For Early Payoff

If you have a FICO score of 580 or above, FHA loan rules say you technically qualify for the lowest down payment (3.5%). However, be sure to ask your loan officer if that financial institution’s standards require a higher FICO score for the lowest down payment. Many lenders do have a higher credit score range for 3.5% down, often in the mid-600s.

If you make a larger down payment than the minimum required (3.5% for those with qualifying FICO scores) and plan to make larger-than-required payments to make your loan term end faster, be sure to discuss early payoff procedures with your lender. FHA loan rules have their minimum requirements in this area but your loan officer can tell you about any additional rules that may apply in your state or with your transaction.

Don’t plan on an early payoff without discussing how to do it according to your financial institution’s guidelines.

Lower down payments are a good thing; borrowers can also add certain closing costs to the loan amount to further reduce up-front and out-of-pocket closing costs. Your mortgage payment amount may be affected by adding such items to your loan amount, but if your goal is to lower your initial costs in cash, it may be worth considering.

Joe Wallace - Staff Writer

By Joe Wallace

November 14, 2018

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 for (8) years and is currently the Associate Editor for

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About was launched in 2010 by seasoned mortgage professionals wanting to educate homebuyers about the guidelines for FHA insured mortgage loans. Popular FHA topics include credit requirements, FHA loan limits, mortgage insurance premiums, closing costs and many more. The authors have written thousands of blogs specific to FHA mortgages and the site has substantially increased readership over the years and has become known for its “FHA News and Views”.

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