November 5, 2018
How do you know if you qualify for an FHA mortgage? There are several minimum requirements you should know, but keep in mind that we are not discussing an individual lender’s standards (which will vary depending on the lender) but the FHA Single Family Home Loan program’s basic rules. When you talk terms with a participating FHA lender, you can discuss what additional requirements may apply with that financial institution.
The Basics
FHA home loans are for financially qualified borrowers regardless of their status as first time buyers or experienced home owners. There is no minimum or maximum income dollar amount specified for FHA home loan approval. Borrowers may be eligible even if they have a bankruptcy or foreclosure in their history as long as good credit has been re-established and the borrower has had the bankruptcy discharged for a minimum amount of time.
Those with a foreclosure in their credit history must also wait a minimum amount of time (a “seasoning period”) that may vary depending on the lender, but would be a minimum of one year but could be longer depending on circumstances.
Qualifying FHA Home Loan FICO Scores
The FHA home loan program guidelines for FICO scores includes a range from 580 or higher-those who have FICO scores of 580 or above technically qualify for maximum financing with the lowest down payment under FHA loan rules. A participating lender may have a higher minimum FICO score threshold, but this will vary among participating lenders.
Qualifying FHA Home Loan Employment Records
FHA loan rules require the lender to verify a minimum of two years of employment though that rule does not necessarily require you to be with the same employer for that two year minimum. Gaps in employment may require a written explanation from the borrower. Lender requirements may be added to this-ask your loan officer.
FHA Home Loan Credit History Requirements
You may qualify for an FHA mortgage if you come to the application process with a minimum of 12 months of on-time payments on all financial obligations. Additional lender standards may apply.
Qualifying FHA Home Loan Purchases
Financially qualified borrowers (see above) can be approved for FHA home loans on properties that meet the FHA’s minimum standards. These properties qualify if they are between one and four units under FHA loan rules, but ask the lender what standards may be for purchasing multi-unit properties.
Qualifying FHA loan purchases require the borrower to affirm she will occupy the property as the primary residence; occupancy is a requirement for FHA home loan approval. FHA home loans cannot be used to buy single-family homes without the intent to occupy no matter how many units may be available in the property. The borrower must live in at least one of those units to be approved for the loan.
Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for FHANewsblog.com where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.
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