FHA Loan Requirements for 2014

What are the credit requirements when getting an FHA loan?

To qualify for an FHA loan a credit score (FICO) of a minimum 580 is required. Credit requirements for FHA loans are much more lenient than for conventional loans. Conventional loans usually consider a credit score (FICO) starting at 680-700 to be a good score, even though 740 is considered to be the benchmark as an ideal score.

What does my debt to income ratio have to be to qualify for an FHA loan?

With our FHA loan you may qualify with a a debt to income ratio of 45% of your gross monthly income for your principal and interest taxes and insurance payment and in some cases as much as 55% of your gross monthly income for all debts.  Which is your housing debts plus all other debts on your credit report, , other considerations will be applied when qualifying(credit cards, student loans).

What are Down payment FHA Loan Requirements?

FHA backed loans have the lowest down payment requirement with a 3.5% down payment. But keep in mind low down payment programs (5% of purchase price) are also available for conventional loans as well, conventional options with less than 20% down will include private mortgage insurance.

Can I get help to cover closing costs for an FHA loan?

Short answer is, yes. Closing costs can be contributed through gift funds (must be sourced) from family members and friends. Closing costs may also be contributed from the seller. Sellers are allowed to fund up to $6,000.00 to cover closing costs for an FHA loan.

FHA Loan Requirements when it comes to your job

A current employment standing is required with 2 years of experience. Which means you must have proof you worked in the same profession or field for at least 2 years.

What documents do I need to apply for an FHA loan?

The documents required for an FHA loan are very similar to applying for a conventional loan. Here’s what you’ll need:

  • Paycheck stubs for the past 30 days
  • Last two years of tax documents, either W-2 forms or 1099 forms.
  • Copies of tax returns filed for the past two years, including all schedules if you are self employed. (Additional corporate tax documents may be required)
  • Profit and loss statements must be Year-to-date (if self-employed)
  • Past two months of bank statements. (Checking, Savings, Investment Accounts)
  • Copies of valid current identification (driver’s license, passport, or military ID).