It is true that requirements for FHA loans are significantly laxer than traditional home loans. However, it doesn’t mean that you could get an FHA loan in a snap. You have to not that the specific guidelines and threshold would likewise differ from one lender another. That said, below are FHA loan requirements you could expect as of 2017.
Your total DTI or debt to income ratio — which includes credit cards, your new home loan, student loans, as well as any other monthly debt repayments — should not exceed 50% to qualify for the FHA loan program.
There’s no minimum salary requirement for borrowers. However, you should have two established credit accounts (e.g., auto loan and a credit card in your name and an account containing cash gifts that would go towards your down payment). You also shouldn’t have delinquent federal judgments. Another thing to note is that any debt related to previous FHA-backed home loans in your record will disqualify you.
Down Payment Amount
You should have a 580 credit score or higher if you want to take advantage of the 3.5% minimum down payment for FHA loans. If your credit score is between 579 and 500, you will need to put down 10% down payment instead.
The property you’re looking to buy should also meet specific requirements. For starters, the property can’t be an investment property. It also can’t be a “flipped property“, which means that you can’t purchase the property within 90 days of a previous sale. The property should be under your name or a living trust. It should be a primary residence. And, you (if you’re not co-owning the property) should live in it within 60 days following the closing. Take note that an inspection is mandatory. This is all the more reason to ensure that the property meets these requirements.
The property you’re eyeing should likewise meet specific geographical loan limits. In general, the loan limit for single-family properties in high-cost cities and states is $636,150. It is $275,665 in low-cost cities and states.
Keep in mind that the FHA only insures the home loan. However, it’s up to the lender to approve your application. Speak to a local lender that offers the FHA loan program to determine your eligibility or check out other loan options available.