Uncategorized April 13, 2023

What are the requirements of a FHA loan?

An FHA loan is a type of mortgage loan insured by the Federal Housing Administration (FHA). Here are the basic requirements to qualify for an FHA loan:

  1. Minimum credit score: A credit score of at least 580 is required to qualify for an FHA loan with a 3.5% down payment. If your credit score is between 500 and 579, you may still be eligible, but you will need to make a larger down payment of at least 10%.
  2. Employment history: You must have a steady employment history or have worked for the same employer for the past two years.
  3. Income: Your debt-to-income ratio (DTI) cannot exceed 43% of your gross monthly income.
  4. Down payment: A down payment of at least 3.5% of the purchase price is required.
  5. Property requirements: The property you are purchasing must meet certain requirements, such as being your primary residence and meeting minimum property standards set by the FHA.
  6. Mortgage insurance: FHA loans require mortgage insurance premiums (MIP), which protect the lender in case the borrower defaults on the loan. The upfront MIP is typically 1.75% of the loan amount and is added to the loan balance, while the annual MIP ranges from 0.45% to 1.05% of the loan amount and is paid monthly.

It’s important to note that these are just the basic requirements, and lenders may have additional criteria that must be met to qualify for an FHA loan.