FHA loans are an attractive option, especially for first-time homeowners because it is insured by the Federal Housing Administration (FHA). Primarily, the federal government insures loans for FHA-approved lenders in order to reduce their risk of loss if a borrower defaults on their mortgage payments.Typically the borrower can be approved with 3.5% down vs 20% that is required on other loan programs. We are a leading provider of FHA loans in Exeter, Hanford, Porterville, Tulare and Visalia – as well as the state of California. For more information on FHA loans and how you qualify, contact us today at 559.816.3985 or complete the quick quote in the right hand margin.
Advantages of FHA Loans
Typically an FHA loan is one of the easiest types of mortgage loans to qualify for because it requires a low down payment and you can have less-than-perfect credit. In addition can be layered with various Buyer Assistance programs that provide funds for the down payment and/or closing costs.
How to Qualify For FHA Loans
FHA loans are not just for first-time home buyers, and they are not restricted to low-income applicants. The requirements needed to qualify for an FHA loan.
- Verifiable Income – steady income you can verify with pay-stubs or tax returns is the first and most important requirement to get an FHA loan. It is important to see a year or two in the same field (if not the same employer).
- Ability to afford the housing payment AND any existing debt – A guideline to measure a applicant’s ability to afford the payment(s):
- The mortgage payment must not be more than 35 percent of applicant(s) income (before taxes) and
- The mortgage payment PLUS other monthly debt payments (car loan, credit cards) must not be more than 45 percent of applicant’s income.
- Have at least 3.5 percent down payment (First-time Home Buyers) – The minimum required down payment for an FHA loan is 3.5 percent. In reality, you will want to be prepared to have access to 3 percent of the home’s purchase price to account for closing costs. For qualified applicant’s Buyer Assistance programs are available to assist with down payment and/or closing costs.
- Have established credit history – FHA requires applicants have an established credit history with at least two lines of credit (for example, a car loan and credit card).
- Have a FICO score of at least 580 – The minimum FICO score to qualify for the FHA loan program is 580. However it is at the lender’s discretion to set lower minimum credit score requirements.
Mortgage Insurance Premiums
The drawback of an FHA loan is the mandatory private mortgage insurance (PMI). PMI is insurance you must pay, both upfront and monthly, that protects the lender in the event of a default. PMI is required for anybody who puts less than 20 percent down on a home.
FHA Loan Limits
There are federally-set limits to how much an applicant can borrow with an FHA Loan that vary by state and county. FHA 2019 Loan Limit is $314,827 for a single family residence in Fresno, Kern, Kings and Tulare counties.
Apply For An FHA Loan
FHA Loans are a great option for First-time Home Buyers. We are a leading provider of FHA loans in Exeter, Hanford, Porterville, Tulare and Visalia – as well as the state of California. For more information on FHA loans and how you qualify, contact me today at 559.816.3985 or complete the quick quote in the right hand margin.