A sector of the market that is not necessarily being met by other loan programs is being served by FHA insured mortgages.
Buyers would love to secure a conventional 80 percent mortgage without mortgage insurance and get the lowest cost of financing possible, but if they can’t put down 20 percent then it isn’t really an option for them.
VA loans which are 100 percent are another option that are only available to those who are veterans with intact eligibility.
Some buyers could be eliminated by the option of getting a conventional loan program with 3 percent down payment and mortgage insurance when they need a credit score of 740 or above to qualify.
FHA exists because of all the statements above. This viable alternative can cover about 20 percent of new and existing home sales. With requirements made not as demanding by Federal backing, it is easier for first-time and low-income buyers to qualify. FHA is also more lenient with buyers who have had a bankruptcy, short sale or foreclosure.
Finding the right home and getting the right mortgage is a team effort between your real estate professional and a qualified mortgage professional. Call us at (703) 303-4010 for a recommendation of a trusted mortgage professional.
General FHA loan requirements include:
- The loan is for primary residences only but can include two, three or four units.
- The property must be appraised by an FHA-approved appraiser.
- 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 Social Security number.
- 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.
- Documentation is required if the down payment was gifted by a family member.
- The borrower must have a debt-to-income not exceed limits of 31% for front-end and 43% back-end ratio (some exceptions may apply).
- Any judgments or collections on the credit report must be resolved or satisfactorily explained.
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