Fha Loan Qualifications

Fha Loan Qualifications



Fha Loan Qualifications
What is​ an​ FHA loan and do I​ qualify?
In 1934,​ Congress established the​ federal housing administration .​
This agency built the​ foundation for more affordable loans,​ enabling many Americans to​ buy a​ home with little money down and low interest rates .​
The government insures lenders against borrower default on​ FHA loans,​ which reduces the​ risk to​ lenders and allows them to​ offer lower interest rates .​
Additionally,​ the​ FHA has set fairly liberal underwriting guidelines that make FHA loans available to​ a​ large group of​ people .​
This high demand also helps keep the​ interest rates low.
If you​ are looking to​ buy a​ home with little money down,​ an​ FHA loan may me right for you​ .​
To help you​ know if​ you​ could qualify for this type of​ loan,​ consider the​ following guidelines:
Income Qualifications
The past two years of​ complete income tax returns with schedules and W-2s as​ well as​ the​ past two months of​ pay stubs are used to​ establish your income .​
Your monthly gross income (before taxes) is​ used to​ determine the​ loan amount you​ can qualify for.
Your housing ratio should not exceed 29% of​ your monthly gross income .​
This means that the​ amount you​ pay each month to​ cover the​ principal,​ interest,​ taxes,​ and insurance for your home divided by your monthly income should not be greater than 0.29.
Your total debt ratio should not exceed 41% of​ your monthly gross income .​
This means that your mortgage payment,​ auto payment,​ and any other debt lasting more than 10 months divided by your monthly income should not be greater than 0.41.
If you​ have filed for bankruptcy,​ you​ must be at​ least one year into payout before you​ can qualify for an​ FHA loan .​
Down Payment
Most FHA loans require a​ down payment of​ 3% of​ the​ cost of​ the​ home .​
Unlike some other types of​ loans,​ this does not have to​ come from your savings or​ reserves .​
The down payment can come as​ a​ gift from a​ family member or​ from a​ down payment assistance program.Although the​ FHA set general guidelines,​ individual lenders may have additional guidelines for the​ area where you​ live .​
Additionally,​ lenders that are well acquainted with FHA loans may be able to​ work around some of​ the​ general guidelines,​ so it​ is​ important to​ shop around for a​ good lender that is​ knowledgeable of​ FHA loans.




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