FHA home loans have been giving Americans loans since 1934, and are still one of the most obtained and trusted loan sources. Federal Housing Administration (FHA) loans were created during the Great Depression to provide lenders with sufficient insurance due to the high rate of foreclosures and defaults. The loan program was also intended to house purchasing accessible to all financially responsible Americans, regardless of wage.
While an FHA loan is one of the easier loans to obtain, there are still several steps and qualifications involved with getting approved. The first step is to speak with one of the local mortgage companies in your area. There are several advantages to speaking with a local lender and with FHA loans being extremely versatile, having a local specialist who can customize the loan based on your needs and wants is essential to getting the best outcome.
Who Qualifies for FHA Loans?
One of the biggest advantages of FHA loans is that they are extremely flexible for qualifying buyers. Qualifications for getting the loan take into account a few major factors such as credit score, total income, income-to-debt ratios and work history. The bare-minimum credit score for obtaining a standard FHA loan (3.5% down payment) is a FICO score of 580. Typically the higher the credit score, the lower the loan interest rate. If your FICO score is at least 500, you can still obtain a loan but with a minimum down payment of 10%.
The total income and income-to-debt ratios are the biggest factors in determining total buying power. While there is no minimum income requirement, the income-to-debt ratio (total debt versus the total amount of income) cannot exceed 41% in most cases. In some specific special cases, the income to debt ratios can be up to 50%, but an ideal ratio to obtain is 36%.
Am I Eligible for an FHA Loan?
Work history must be steady for a minimum of 2 years in related work experience and you have to have worked at your current job for at least 6 months. College students who get a job directly out of college in the same field as their degree qualify because the schooling qualifies as full-time work. Lastly, a buyer cannot have a bankruptcy or foreclosure within a minimum of 2 years of loan obtainment.
If unsure of any of these qualifications, it is important to speak with a lender to know what factors need improving. For specific lender requirements, your FHA loan specialist can help walk you through the qualification process.
On top of having lenient qualifications and loan flexibility, FHA loans require a low down payment of 3.5% of the total loan. For instance, a loan of $100,000 will require $3,500 down. For comparison, Conventional Loans require a bare-minimum of 5.0% for a down payment.
Who Offers FHA Loans?
United Atlantic Mortgage is one of the leading mortgage companies in the entire state of Virginia and located in Virginia Beach while being an FHA approved lender. The best part is that you can be given same day pre-approval issuance to give you (and the seller) confidence when purchasing a home.
As an approved FHA lender, you can be assured that you are in good hands with one of the FHA loan specialists at United Atlantic Mortgage. Contact us today to get started on your FHA loan qualification!