Section 2: Am I Eligible for a FHA Loan

Eligibility For a FHA Loan
      In general, to be eligible for an FHA loan, borrowers must meet the following guidelines: Have a FICO score of 500 to 569 with 10 percent down, or a FICO score of 580 or higher with 3.5% down. FHA loans, which are insured by the Federal Housing Administration, are great loans for those who are budget sensitive and having credit difficulties. 

 

*Don’t meet the minimum requirements? You still may be eligible: talk with an Orbit Home Loan specialist today.  (CLICK). See if you meet the qualifications (CLICK)

Down Payments

It’s possible for first-time home buyers to get FHA mortgage with a down payment as low as 3.5%; however, the down payment requirement can vary based on your personal situation and the type of loan or property you’re getting. The minimum FHA loan down payment is either 3.5 percent or 10 percent, depending on your credit score. For anyone with a credit score of 580 or higher, 3.5 percent is the minimum required for a down payment. Anyone with a credit score of 500 to 579 will have to have 10 percent for a down payment.

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Documents Your Lender May Require

- W2s or 1099’s
- Bank Statements
- Pay Stubs
- Asset Statements
- Liability Statements
- Legal ID

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FHA Lender Requirements 

Credit and Income

The minimum credit score for an FHA loan is 500. If your score falls between 500 and 579, you can still qualify for an FHA loan, but you'll need to make a larger down payment. Again, these are FHA guidelines — individual lenders can opt to require a higher minimum credit score. To be qualify for an FHA loan, borrowers must meet the following lending guidelines:

• Have a FICO score of 500 to 579 with 10 percent down, or a FICO score of 580 or higher with 3.5 percent down.
• Have verifiable employment history for the last two years.
• Have verifiable income through pay stubs, federal tax returns and bank statements.
• Use the loan to finance a primary residence.
• Ensure the property is appraised by an FHA-approved appraiser and meets HUD guidelines.
• Have a front-end debt ratio (monthly mortgage payments) of no more than 31 percent of gross monthly income.
• Have a back-end debt ratio (mortgage plus all monthly debt payments) of no more than 43 percent of gross monthly income (lenders could allow a ratio up to 50 percent, in some cases).
• Wait one to two years before applying for the loan after bankruptcy, or three years after foreclosure (lenders might make exceptions on these waiting periods for borrowers with extenuating circumstances).

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How to Apply for a FHA Loan

Get started today with one of the best and most secure ways possible. Here are Orbit Home Loans we have a trusted team ready to help you find your dream home. Talk with you trusted Orbit Home Loans broker that knows FHA loans and how to get the most from this hard-earned benefit. The process typically starts with getting pre-approved, which can often be done in minutes using your phone, laptop or tablet. 

Loan pre-approval is a key first step before making an offer on your dream home. Having that pre-approval letter gives you a clear sense of your buying power and shows sellers and listing agents you have what it takes to get to closing. 

Questions about whether you qualify? (CLICK)