When purchasing a new home, there is an important financing option to consider, the FHA loan. If you meet the FHA Home Loan Qualifications, you may be able to save a lot of money with an FHA loan.
Not everyone qualifies for one of these loans because the federal government has set some strict guidelines. The majority of people who finance with this type of loan are first time home buyers.
Here are seven FHA Home Loan Qualifications:
2. There is also a maximum loan amount that is determined by the federal government. This amount is determined by assessing the costs of the area and the price ranges.
3. In most cases, this type of loan has a loan to value ratio of 96.5% unless there is special circumstance in which a larger down payment is required.
4. Having a solid employment history is another one of the FHA Home Loan Qualifications. Whether you are an employee or are self employed, to qualify for an FHA loan you must usually maintain a job or line of work for 1-2 years. A diploma may be accepted instead of work history if the borrower is a recent graduate. Borrowers who are self employed must provide 2 years of tax returns as well as a profit and loss statement.
5. The debt to income ratio of a borrower cannot be over 41% in order to meet the FHA Home Loan Qualifications. In some cases the government may allow up to 45%, especially if the debt is due to student loans.
6. FHA also requires the borrower to pay a down payment of 3.5% of the purchase price, unless there are special circumstances that may require a larger down payment. At closing, the seller can pay up to 6% of the closing costs for the borrower.
7. Last but not least, an thorough inspection of the home is one of the very important FHA Home Loan Qualifications. The federal government has strict standards on what they consider a habitable place to live. If the house is in need of any maintenance or improvements, the seller must have them repaired prior to closing. If they refuse to make improvements, the home will most likely not qualify for an FHA loan.
FHA Housing Loans are the most popular ways of financing the purchase of home today in United States, mostly because of the low down payment and the low credit requirements. If you can meet the FHA Home Loan Qualifications then you can purchase that dream home of yours!