When you start doing research on home loans and want to learn what it takes to qualify for an FHA mortgage loan as either a first-time home buyer or as a return borrower, you will find websites with lists of loan approval requirements.
Some of those FHA home loan approval requirement lists look like this:
- A credit score of 580 or higher for the lowest down payment
- A debt-to-income ratio of 43% or less
- 3.5% down payment
- 1-2 years of consistent employment history
- A property that meets FHA standards OR
- A home eligible for FHA 203k rehab loan financing
You may find a caveat on lists like these stating that they are “general guidelines” and that is true. What isn’t always included in those caveats is that additional lender standards may apply.
That is why it’s good to prepare early for your home loan credit check-you want to get your debt-to-income ratio as low as possible before applying and you will definitely need a full year of on-time payments on all financial obligations before you apply, for best results.
But there are other FHA home loan facts you should know, too.
FHA Home Loan Facts
FHA home loans are not just for first-time home buyers.
FHA loans are not need-based, have no income caps, and do not require you to live in a rural area.
3.5% down payments are required, but down payment assistance that meets FHA loan standards is allowed.
You may still qualify for an FHA home loan even if you have had a negative credit event on your record. These situations are handled on a case-by-case basis.
You can buy a condo or mobile home with an FHA mortgage.
The seller is not permitted to help you with your down payment, but is permitted to contribute up to six percent of the sale price of the home toward closing costs.
FHA home loans require an appraisal, but you should never rely on the appraisal alone-get home inspection.
FHA mortgages are available at the same down payment percentage no matter how large the home is. You can buy a home with as many as four living units.
Getting pre-qualified for an FHA loan makes you a serious home buyer. Sellers will take you more seriously and you will know how much home you can afford.