Qualifying for an FHA loan in 2019

Among all mortgages, the FHA mortgage is the easiest to qualify for. Many FHA lenders might have contacted you through FHA leads to offer you FHA approved home loans. But before signing the deal with any of them it is important that you find out if you actually meet the latest requirements of an FHA loan. Answer the following questions to find out if you qualify for an FHA loan:

Are you aged 18 or above?

Do you have a credit score that is equal to or more than 580?

If not, can you afford to make a 10% down payment (credit score between 500 and 579)?

Do you have steady employment?

Have you worked with the same employer for more than two years now?

Can you provide paycheck stubs, W2s, and income tax returns to prove the employment details that you furnish?

Are you going to live in the home that you are going to buy through an FHA loan?

Is your debt-to-income ratio equal to or less than 43 percent?

Have you got your home checked by an FHA approved appraiser?

Are you ready to pay mortgage insurance premium along with your monthly mortgage payments?

Anyone who wants to purchase a home can obtain an FHA loan from an FHA approved lender who contacts them through FHA leads. If you can’t afford the down payment, you can even receive it as a gift. However, the person who gives you this gift needs to meet FHA guidelines.

Relatives, Friends, charity organizations, employer, or worker’s union are good sources to receive your down payment as a gift. They will have to fill out a gift letter for you stating that they are agreeable to pay your down payment as a gift to you. Once they do, you can manage to obtain 100% financing to buy your home.

One thing you need to remember before signing up with an FHA lender who gets in touch with you through FHA leads is that these loans come with closing costs. You will have to pay money towards origination fees, title insurance, home appraisals, and more. The total amount of the FHA closing costs comes up to 2 to 5 percent of the purchase price of your home. Make sure you shortlist a few lenders, compare their loan offers and fees and then take a decision on the best FHA lender.

When compared to conventional mortgages, FHA loans come with limits. In low-cost areas which comprise 60% of the U.S, the maximum amount you can get a loan for is $294,515. In high-cost areas such as San Francisco and Los Angeles, you can go for a home which costs about $679,650 or below.

PMI (Private mortgage insurance) or MIP (mortgage insurance premium) is a must if you want to go for an FHA loan. You will have to pay an up-front MIP of 1.75% as well as an annual MIP. You cannot get your annual MIP canceled unless you put in more than 10 percent down payment. Another way to get your PMI canceled is to refinance your FHA loan into a conventional one.

The best part about FHA loan is that it is assumable. So when you sell your home you can conveniently transfer your loan to your buyer. In case you want to pay back your FHA loan before the term ends, you can do so without worrying about any prepayment penalties. You can also take in a non-occupying co-borrower or co-signer.

Before you finalize the contract with the FHA lender who comes to you via FHA leads, understand the fact that you can get some additional money to make home repairs by going for an FHA 203k loan. You will, however, need a minimum credit score is 640.

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