FHA Loan Qualifications

It’s always good to know the FHA loan qualifications before applying. Being prepared is half the battle, so once you know the FHA loan qualifications, you’re half done with your loan process. It’s good, because, you can have fair idea of the lender, market and other circumstances, and hence you can make right and smart choice. Here goes the quick overview of all what you should know:

• FHA will insure you a loan only if is it your primary residence. If you’re a first time buyer, Investor or purchasing a home to rent it out, you’re not eligible for this type of financing.
• The maximum loan amount is determined by the federal government.  Generally, FHA allows a 96.50 loan to value ratio. However, there are special circumstances that may require additional down payment, like when purchasing from a close relative.
• Although FHA does not require a minimum credit score, the lender, however, will require a minimum credit score requirement.
• One important part of an FHA loan is the employment requirement that determines whether or not you will be able to pay back the loan appropriately. You must have 1 to 2 years continuous employment history.
• FHA established 41% as their guideline for debt to income ratio, which can be up to 45% in some cases.
• Your down payment on your home must be 3.5%. You can make more down payments too.
• You must also have to prove the home “habitable”, means no leaky roofs, running water, electricity outage etc. Another thing is that if property needs improvements, and the seller is not willing to make the improvements, the home may not qualify for an FHA loan.

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