Who Qualifies for an FHA Home Loan?
- FHA mortgage loans are helpful because they don't require high credit scores. Conventional mortgage loans do set the bar higher, and these loans require a minimum score of 680. Meeting this requirement entails wise credit habits, demonstrated by timely bill payments and keeping balances on credit cards to a minimum. With FHA, borrowers can qualify for a home loan with a score of 620.
- Waiting two years after a home bankruptcy and three years after a home foreclosure increases eligibility for an FHA mortgage loan. Serious credit issues do remain on credit reports for up to 10 years. Borrowers who maintain perfect credit after a serious mishap and allow the required time to pass can qualify for a mortgage within a couple of years.
- FHA home loan lenders will keep your mortgage payment within a reasonable price range. They will review your income and debt payments to see how much you can spend on a mortgage. Staying within budget reduces payment problems in the future. As a rule, FHA lenders keep mortgage payments around 30 percent of your gross monthly income. Meet with an FHA mortgage lender first and acquire a mortgage pre-approval. Pre-approvals provide information on how much you can afford to spend before beginning the search for a home.
- Lenders need to see copies of numerous documents to assess eligibility and determine affordability. Keeping track of your tax returns and pay information for at least two years helps smooth the process and can result in a quick approval. Documentations to qualify include W-2's, paycheck stubs, banking statements and information on other income sources.
- FHA mortgage lenders ask for little money down, and borrowers can qualify for mortgages with as little as 5 percent down. Down payments can come from personal savings accounts, 401k's, other retirement accounts or gifts from family members. Selling another property and using the money from the sale can provide adequate cash for a mortgage down payment.
