Advantages to FHA Loans
- FHA loans can be used for a home purchase or a refinance.
- Easiest type of real estate mortgage loan to qualify for because it requires a low down payment you can have less-than-perfect credit.
- FHA insures your mortgage making lenders more willing to offer loans.
- FHA loan is assumable, meaning if you want to sell your home, the buyer can “assume” the loan you have.
FHA Qualification Checklist
- Steady employment history or worked for same employer for the last two years.
- Valid Social Security number, lawful residency in the U.S., and be of legal age to sign a mortgage in your state.
- Make a minimum down payment of 3.5% on the house. The money can be gifted by a family member (conventional financing does not allow gifting).
- A property appraisal from an FHA-approved appraiser.
- Mortgage payment (including principal, interest, property taxes, property insurance) needs to be less than 31% of your gross monthly income.
- Monthly debt (mortgage, credit cards, auto, student loans, etc.) cannot be more than 43% of your monthly income.
- A minimum credit score of 620.
- Two years out of Chapter 7 bankruptcy with good established credit.
- Three years out of Chapter 7 foreclosure with good established credit.
- One year completed of Chapter 7 payment history.