How to qualify for an FHA Loan?
Securing a home loan can be stressful. Being successful in obtaining a loan depends on things like your credit, work history, and available assets, among other factors. The Federal Housing Administration created the FHA loan in 1934 to help increase homeownership and insure mortgage loans from private lenders, which helped promote lending to individuals with a less than perfect credit history.
FHA loans allow homebuyers to provide a small downpayment while still securing a mortgage at a competitive interest rate. An FHA-approved lender like Butler Mortgage can help you acquire your FHA loan. Lenders are comfortable offering FHA loans because the FHA insures the mortgages.
Qualifying for an FHA Loan
In order to qualify for an FHA loan, you will need to meet certain criteria that includes:
- A credit score that is 580 or higher.
- The property must be owner occupied.
- The property must be either a single-family residence, a townhome, a condominium, or a manufactured home.
- A minimum downpayment of 3.5 percent, which could be gifted to you from a relative.
- Establishing an impound (or escrow) account, which means that in addition to the principal and interest portion of your payment, you will pay your property taxes and homeowner’s insurance monthly, and the lender will forward those amounts accordingly.
- Providing your lender with your past two years of employment history. If you were attending school during this time, that might count towards your work history if your current job is in a field related to your education.
- Providing proof of income that shows you can meet the maximum debt to income ratio requirement which is currently 43 percent, though exceptions may be made if your credit is strong.
Choose Butler Mortgage for Your FHA Loan Needs
Butler Mortgage is your local FHA-approved lender. We have worked with many of your neighbors in Central Florida since we first opened our doors in 1994, and built a business on trust. We understand every customer is different, and we are committed to finding a mortgage product that best suits your needs. Contact us today at 407-931-3800 or online to request a free consultation.