Loan requirements are tricky for an FHA. Federally qualified lenders issue FHA loans. Also. the Federal Housing Administration insures FHA loans, and is where it gets its name. FHA loans are made for low-to-moderate income borrowers who can not afford to make a large down payment. Other loan programs are not meeting the same standards that an FHA insured mortgage can because it is part of a unique sector of the market.
For example: Securing a 75% conventional mortgage that doesn’t require mortgage insurance may be the lowest cost of financing but if the buyer doesn’t have 20% down payment, it isn’t really an option and that’s where a loan from the Federal Housing Administration can help. Around 20% of all new and existing home sales can benefit from an FHA. There are loan requirements that you have to follow.
Since the federal government backs these types of loans it is easier for first-time and low-income buyers to qualify. Therefore, the requirements are not as demanding. If you have experienced the hardships of bankruptcy, foreclosure, or short sale on your home, you can still qualify for an FHA if you meet certain criteria. For help, contact Colorado Horse Property.
Loan Requirements
- If a family member gives you the down payment, documentation is required to show that.
- The borrower must have a debt-to-income not exceed limits of 31% for front-end and 43% back-end ratio.
- You resolve or explain any judgments or collections on the credit report.
- The loan is for primary residences only but can include two, three or four units.
- An FHA-approved appraiser appraises the property.
- The property must be safe, sound and secure, in compliance with minimum property standards as defined by the U.S. Department of Housing and Urban Development.
- The borrower must be a legal resident of the U.S. and have a valid SSN.
- The minimum credit score of 580 with a down payment of at least 3.5 percent, or a minimum credit score of 500 with a down payment of at least 10 percent.
- The borrower may not have delinquent federal debt or judgments, or debt associated with past FHA loans.
- The borrower must have steady employment history.
