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FHA Loan Reader Questions: Income Requirements

March 25, 2014

055A reader asks, “What is the income limit for a loan? My daughter and friend wants to buy a home with a few acres. She started a new job in Nov of 2013. He has a good income and working on his credit rating. They do not have enough for a large down payment.”

FHA loans do not feature a minimum or maximum income limit. Instead, the lender must get employment and income information from the borrower(s) and determine the applicant’s debt-to-income ratio. A borrower with too much debt and not enough income will not qualify for the FHA loan.

The borrower who has little debt but not enough income to qualify for the loan based on how much debt to income that would apply with the mortgage figured in would also not qualify.

The debt to income ratio is an important calculation, so borrowers should discuss the lender’s standards when considering an FHA mortgage loan.

The reader question also includes mention of a down payment. Borrowers should know that FHA loans do feature a minimum required cash investment–a down payment–of 3.5% of the loan in general terms. The downpayment is mandatory and it’s good to start saving for it as early as possible in the loan planning stages.

It’s also good to know that the FHA does not consider payment of fees, expenses, or loan costs in the down payment amount. The down payment is a separate expense and must be budgeted for accordingly.

Borrowers who seek down payment assistance will need to discuss those needs with local agencies as the FHA does not administer such programs.

Planning for the expenses of an FHA loan early in the house hunting stages–or better yet, even before house hunting begins–is the best way to manage those costs. Saving and budgeting are important for the success of your FHA home loan application when the time is right.

Do you have questions about FHA home loans? Ask us in the comments section. You can apply or get pre-approved for an FHA loan at FHA.com, a private company and not a government website.




Joe Wallace - Staff Writer

By Joe Wallace

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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FHANewsBlog.com 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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