How to Qualify for an FHA Loan
FHA loans are now more than 25% of all mortgages in the United States. They are a great mortgage option for individuals who have a small down payment or even bad credit. Shopping for a mortgage can be confusing and sometimes stressful because a home purchase for most people is a huge decision.
Qualifying for an FHA loan does not have to be a difficult process. It is all about educating yourself on the steps and understanding what is required, the timeline, and the potential costs. Here are the basic requirements to qualify for an FHA loan:
- You must be employed or self employed for at least two years
- You must be able to document your income and provide tax returns
- A 3.5% down payment is needed for credit scores of 580 or higher and 10% down for credit scores below 580
- A minimum credit score of 500 is required
- No bankruptcy discharged within the past two years
- No foreclosure within the past three years
- FHA mortgage insurance is required for all FHA loans
These are the basic requirements to qualify for an FHA loan. If you believe you can meet the general requirements above, then the next step would be to speak with an FHA lender to find out exactly how much you can qualify for.
FHA Research and Education
It is recomended that you completely educate yourself on all of the steps and costs associated with financing your home with an FHA insured mortgage. You need to be prepared for the closing costs and mortgage insurance. The articles referenced below are a must read for anyone who is thinking about financing with an FHA loan.
These four articles will provide you with most of what you need to be prepared for an FHA loan.
What are the FHA Mortgage Rates?
FHA mortgage rates are extremely competitive and usually slightly less than a conventional loan. The rate that the lender will offer you will primarily be tied to your credit score. Another factor would be your loan amount. Some lenders add a rate premium for very small loan amounts.
How Long Does it Take to Close on an FHA Loan?
Most FHA purchase loans can be closed within 30 days. When you factor in the appraisal, real estate contracts, and title work, a 30 day closing is the likely scenario. Meanwhile, if you are refinancing with an FHA streamline refinance, then the closing can happen sooner due to the reduced documentation and no appraisal requirement.
Related Articles
FHA vs Conventional Loan Comparison
How to Get an FHA Loan With No Money Out of Pocket
