FHA Loan Checklist: A Look At FHA Requirements
Fortunately for buyers, there is a basic FHA loan checklist to follow when working to meet qualification requirements.
People should know that the FHA, or Federal Housing Administration, makes home loans possible for veterans and active duty military, first-time homebuyers, and families looking to buy their dream home. The FHA is a branch of the US Department of Housing and Urban Development (known as “HUD”) and it provides mortgage insurance on loans made by private lenders that are FHA-approved.
According to geographic requirements, FHA insures these loans on single family and multi-family homes in the United States and its territories. Historically, it is the largest insurer of residential mortgages in the world, insuring tens of millions of properties since it was created in 1934.
As things stand, the program offers a wide array of home purchase programs and it also is a strong choice for people that are looking to refinance their current homes. Program participants enjoy a low cost of borrowing depending on their credit score, and many loan choices are easy to secure by comparison to conventional home loan choices.
FHA insured loans require mortgage insurance to protect lenders against losses that result from defaults on home mortgages
Why do people get FHA loans?
Because of that insurance, lenders can — and do — offer FHA loans at attractive interest rates and with less stringent and more flexible qualification requirements. In fact, interest rates may show as comparable or even lower than other mortgage loan choices and repayment terms can be up to 30 years. History shows that the most popular FHA loan is the 203(b) which allows buyers to qualify for a loan with a down payment that is as low as 3.5% in some cases.
- Low, 3.5% down payments make home buying accessible
- FICO Scores of 580 may qualify a buyer for FHA loans
- Underwriting requirements are less strict than conventional loans
- FHA loans are privately issued and insured by the government
- FHA loans are sometimes, but not always a borrowers best option
- Most conventional loans require at least a 5% down payment
- Borrowers with high debt-to-income ratios need FHA loans
- Closing costs may be lower as FHA limits fees
Qualifying for a FHA Loan
It’s easy to see if you qualify and most people must first determine how much they can borrow and what their credit scores are. Borrowing limits are different based on a homebuyer’s location and only affect the amount of the loan, not the sale price of the home. To see if a FHA home loan might be right for you and your family, click Get Started for your custom, free home loan quote.