FHA home loans offer a special opportunity for you to become a homeowner with the help of a government insured mortgage. The mortgage is issued by the Federal Housing Administration. These loans have more flexible and forgiving terms and in most cases can offer you lower interest rates and lower minimum credit score requirements than other types of loans.
Are you tired of renting? Have you been living frugally for way too long and ready to upgrade your living situation for you and your family? An FHA loan may be a great option to make your dreams of home ownership a reality.
Is an FHA Mortgage right for you?
The FHA loan program has been more popular than ever the last few years as credit has become harder to get. Getting an FHA loan is popular for new first-time home buyers as well as those who have been through a financial credit event like a short sale, foreclosure or other financial hardship in the past and are looking to get a mortgage to get back on track. It was created to help more borrowers realize the dream of homeownership due to its lenient underwriting guidelines and low-down payment options. Due to this, it’s considered the most flexible home purchase program available today.
What’s so great about an FHA loan?
- 3.5% down payment
- Below market interest rates
- Up to 56.9% debt to income ratio
- Seller can pay your closings costs (up to 6%)
- Gift funds from family members allowed
- Non-occupying co-borrowers can be added to help qualify
What are the minimum requirements?
- 580 credit score of higher
- 2-year work history
- Primary residences only
These are the questions you should be asking yourself at this stage:
- Am I ready to become a homeowner?
- Is my credit at least a 580 or higher and do I have the monthly income to support my current debt load plus a new mortgage payment?
- Do I have access to a 3.5% down payment?
- Do I have any major credit events in my past that could prevent from qualifying?
- If you are disputing any accounts on your credit report you need to have these disputes removed.
Waiting periods for getting an FHA after a credit event and reestablishing your credit:
- Chapter 7 Bankruptcy: 2 year waiting period, starting from the discharge date is required
- Chapter 13 Bankruptcy: 1 year waiting period, starting from the discharge date is required
- Foreclosure: 3 year waiting period, starting from the discharge date is required
- Short Sale or Deed-in-Lieu: 3 year waiting period, starting from the discharge date is required
FHA Loan Ready Checklist
Below is a list of standard documents required for your application. Your mortgage consultant will provide you a list specific to your situation.
- Government issued ID (driver’s license or id card)
- Most recent 30 days of pay stubs
- All W2s for the last two years for all borrowers
- Last two years of complete tax returns
- Two month recent bank statements (all pages)
- Purchase contract (If executed)