Can I Qualify for an FHA Loan?

Can I Qualify for an FHA Loan?

July 25th, 2018 | FHA Loans, Government Loans

FHA loans (those sponsored by the Federal Housing Administration) are mortgages that allow low down payments and have relaxed credit score requirements, making them very popular with first-time homebuyers and those with less-than-perfect credit. If you think an FHA loan might fit your needs, the first step is to determine if you can qualify. Here are the basic requirements: 

Credit Score & Down Payment Requirements for FHA Loans

Credit score and down payment requirements are tied together under FHA loans. For those who have a FICO credit score of 580 or higher, the minimum down payment requirement is only 3.5% of the home purchase price. If the FICO score is between 500 and 579, a 10% down payment is required. Those with scores below 500 are not likely to qualify for an FHA loan. 

Borrowers must have at least two established credit accounts such as credit cards or other monthly payments, in order to prove responsibility with debt.

Debt-to-Income Ratio

While there is no minimum or maximum salary requirement for FHA mortgages, borrowers must have a debt-to-income ratio of 50% or less. That means all of your monthly debts, including credit cards, students loans, car payments and the new mortgage must not make up more than 50% of your monthly income.

Additionally, borrowers may not have any past due federal debts in order to qualify. These would include previous FHA loans, taxes or any other legal judgments.

FHA Loan Limits

FHA loan limits are based on the average housing costs in the surrounding area and can change periodically. The 2018 loan limit for single-family homes in most U.S. areas is $294,515 and $679,650 for higher cost areas.

Documentation for FHA Loans

Several pieces of documentation will be required to qualify for an FHA loan. Borrowers must be able to provide proof of a social security number as well as original pay stubs, W-2 tax forms or other tax returns.

Property Requirements for FHA Loans

Not every home or property itself will automatically qualify for an FHA loans. There are several criteria a property must meet. First the property must be used for your primary residence, with at least one borrower on the loan living in the property within 60 days of closing. FHA loans are meant to help individual homeowners, not to enable property investment. That also means homes cannot be purchased with FHA funds and then be flipped. 

And of course, minimum property safety standards must be met and will be rigorously inspected during an FHA appraisal.

After meeting all these requirements, the final approval of an FHA loan is still at the discretion of the lender. Your odds of being approved will certainly be better if your credit score is higher and your debts are lower. Talking with a lender can also help you discover ways to be a better candidate for an FHA mortgage loan.

Do you want to find out if an FHA Loan is right for you? If so, contact Holmgren and Associates at 510-339-2121 today and we can go over the best mortgage options for your particular situation.


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Holmgren and Associates

DBA of Finance of America
4200 Broadway
Oakland, California 94611
Phone: 510-339-2121
NMLS 0910184/1071

Holmgren & Associates is a branch of Finance of America. We are a full service mortgage banker with an experienced staff offering expertise in residential mortgage lending, with primary focus on loans for home purchase, refinance, and reverse mortgages.

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©2019 Holmgren & Associates is a division of Finance of America Mortgage LLC |Equal Housing Opportunity | NMLS ID #1071 (| 300 Welsh Road, Building 5, Horsham, PA 19044 | (800) 355-5698 | Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act
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This is not a commitment to lend. Prices, guidelines and minimum requirements are subject to change without notice. Some products may not be available in all states.  Subject to review of credit and/or collateral; not all applicants will qualify for financing. It is important to make an informed decision when selecting and using a loan product; make sure to compare loan types when making a financing decision.  Any materials were not provided by HUD or FHA. It has not been approved by FHA or any Government Agency.  A preapproval is not a loan approval, rate lock, guarantee or commitment to lend. An underwriter must review and approve a complete loan application after you are preapproved in order to obtain financing.  Questions, comments, concerns? Send to