Explore the Mortgage101 Library
Check Local Mortgage Rates
Loan Program Choices
Use our calculator to find out your estimated monthly payment in advance: Enter the loan amount, interest rate, and length of mortgage.
Try our Mortgage Payment Calculator
In order to figure out if you meet FHA loan qualifications, it is a good idea to understand what those qualifications are. FHA loan qualifications are made available on the U.S. Department of Housing and Urban Development (HUD) website. The FHA, or Federal Housing Administration, is a federal agency established by HUD to provide homeowners with lending opportunities. All information is provided to the general public.
An FHA loan borrower is a homebuyer that has a low down payment. Other types of borrowers may qualify for an FHA loan, but are limited to only one loan. Since 1934, FHA through the U.S. Department of Housing and Urban Development has provided home ownership opportunities to 35 million Americans. The general requirements that must be met to qualify for an FHA loan deal with a borrower’s credit history and overall financial picture. FHA does not lend out money, instead, a qualified homeowner can seek out an FHA loan through a bank and lender network that has been approved by the FHA. All lenders must adhere to FHA standard guidelines.
One advantage an FHA loan has over conventional loans is that a borrower with less than perfect credit may still be able to qualify for a loan. The mission of the FHA is to provide home ownership opportunities to every American who can provide proof of income and their ability to meet their loan obligation. Derogatory credit is assessed individually and the underwriter will consider the circumstances surrounding the bad debt. Many other types of lenders will not consider your loan application if you do not fall into their credit score standards. But, the FHA considers the entire loan package instead of steering their focus to credit scores.
Bankruptcies and Foreclosures
A borrower who has filed for bankruptcy or had a previous foreclosure is eligible for financing with FHA. In the case of a foreclosure, the foreclosure must be a minimum of 3 years old and the individual must have maintained good credit after the foreclosure. As for a bankruptcy, the requirement is that the bankruptcy must be at least 2 years old and the borrower must have maintained an acceptable credit history for at least 2 years thereafter.
Income Ratios and Other FHA Loan Information
FHA loan programs, loan limits, requirements and guidelines are all found on www.hud.gov. The FHA has more flexible guidelines with respect to income and debt obligations than conventional loans. Additionally, they offer a 3.5 percent down payment, instead of the typical 10-20 percent required by other lenders.
HUD governs the acceptable amount of fees that can be collected by each lender when a borrower is purchasing or refinancing their home. The fees are reduced to standard fees and customary fees of the area. Acceptable fees can also be found on the HUD website. FHA offers a wide variety of loan products. They offer fixed 30-year loans, adjustable rate loans and buydowns. The rate for FHA loans is competitively priced and their adjustable rate products are better than most on the market because they limit the adjustment of the rate to one percent per year.
- Alternatives to Getting a 2nd Mortgage
- FHA Eligibility with Bankruptcy and Foreclosure
- Second Mortgages: Advantages and Disadvantages
- Appraisal Basics
- 3 Warning Signs of Loan Modification Scams
- Short Selling a Rental Property
- Low Down Payment Loan Qualification
- FHA Loans for a First-Time Home Buyer
- 3 Common Short Sale Mistakes