FHA Loan Requirements
Mortgage Insurance is Required for an FHA Loan
What is an FHA Loan?
An FHA loan is a mortgage loan that is insured by the Federal Housing Administration (FHA). The FHA loan is very popular in today’s market mostly especially with first time home buyers because the requirements are less strict than the conventional loans.
Some of the features are the following:
Down payment as little at 3.5%
Credit score 580 or higher.
Credit scores can be between 500-579 if a 10% down payment is made.
One thing to consider however is that the lower your FICO score, the higher the rate typically. Contact us if you need assistance in reviewing your credit.
Now, another advantage of the FHA loan is that it can be assumable, meaning that if you want to sell your home, the buyer can “assume” the loan you have. This is very helpful for people who have had a bankruptcy but can still qualify for an FHA loan.
Is Mortgage Insurance Required?
Due to the reduced strict standards of a conventional loan, two kinds of mortgage insurance premiums are added. They are as follows:
- Mortgage Insurance premium: Paid in full or can be financed into the loan. Typically 1.7% of the home loan.
- Monthly Payment or Annual MIP: called an annual premium but is paid out monthly based on loan size, LTV, length of loan.
Contact our Professional Mortgage Loan Officer to walk you through the Terms,
Loan Amounts, LTV ration and annual insurance premium.
FHA Loan Requirements
All the FHA loan requirements are set forth by the Federal Housing Authority and include the following:
Ready to start on an FHA loan and learn more?
Secure Your Home with an FHA Loan
Are you a First-Time Home Buyer or looking for more affordable financing options? An FHA Loan could be the perfect solution. Backed by the Federal Housing Administration, these loans offer flexible qualification standards, making homeownership more accessible for those with lower credit scores or limited down payments. As a leading FHA Mortgage Broker in California, ALT Financial is here to guide you through the entire process, helping you secure the best terms available.
What is an FHA Loan?
An FHA Loan is a government-backed mortgage designed to help more people achieve the dream of homeownership. This type of loan typically requires a lower down payment (as low as 3.5%) and offers more lenient credit score requirements, making it an excellent option for first-time buyers or those with less-than-perfect credit.
Curious about how it compares with other loan options? Explore our resources for First-Time Home Buyers to understand all your options.
FHA Mortgage Broker in California
If you’re looking to buy a home but don’t have 20% to put down, or your credit history isn’t perfect, an FHA loan is the right solution. This accessible loan combines low down payment requirements with relatively easy qualifying standards. FHA mortgage loans are perfect for buyers who may not get approved by conventional lenders. As an experienced FHA Mortgage Company, ALT Financial will help you navigate the process and secure the best terms available.
Take the First Step Toward Your New Home
Ready to buy your dream home? An FHA loan with ALT Financial can help make it happen. Let’s get started!
How to Apply for an FHA Loan in California
Applying for an FHA loan with ALT Financial is a straightforward process. We will gladly assist you and help you get qualified for this type of home loan. To get prequalified for an FHA Loan, you will need to provide the following information:
- Your current address and Social Security number
- Employment history for the past two years
- Two most recent bank statements
- Two most recent years of W-2 forms
- Two most recent years of Federal tax returns
We are committed to making the home buying process as seamless as possible. Contact ALT Financial, your trusted FHA Mortgage Broker in California, for guidance.
How to Qualify for an FHA Loan
Qualifying for an FHA loan is more accessible than other loan types, but there are still key criteria to meet. Here’s what you need:
- Credit Score: A minimum credit score of 580 for a 3.5% down payment, or as low as 500 with a 10% down payment.
- Down Payment: A down payment of 3.5% is required with a qualifying credit score.
- Debt-to-Income Ratio (DTI): Lenders prefer a DTI of 43% or lower.
- Employment History: You’ll need to show steady employment for the past two years.
- Proof of Assets: You must provide documentation of any assets, such as bank accounts and savings.
At ALT Financial, we will guide you through the qualification process. Even if your situation doesn’t perfectly meet every requirement, we’ll work to help you explore options.
Benefits of FHA Mortgage Loans
Looking to purchase a home in Los Angeles or anywhere in California but struggling with traditional mortgage approval? An FHA Loan is an excellent option. The guidelines and requirements are much more lenient, allowing for lower FICO scores and smaller down payments. Here’s why you should consider an FHA loan:
- ✓Perfect for First-Time Home Buyers
- FHA loans are ideal for first-time home buyers. With low down payments and flexible qualifying guidelines, they make it easier to secure your first home.
- ✓Low Interest Rates
- FHA loans offer lower interest rates because the loan is backed by the government, reducing risk for lenders.
- ✓Finances for Home Repairs
- Need extra funds for home repairs? The FHA offers a special loan called the FHA 203(k), which is based on the projected value of the home after repairs.
- ✓Gift Fund for Down Payment
- With an FHA loan, you can use a gift fund to cover 100% of the down payment for a primary residence.
- For those with less-than-perfect credit or minimal down payment savings, FHA loans open doors to homeownership.
FAQs
How to Qualify for an FHA Loan?
You typically need a credit score of 580 or above for the minimum 3.5% down payment. Other factors include a manageable debt-to-income ratio and proof of steady income.
Can You Have Two FHA Loans?
In most cases, you can only hold one FHA loan at a time. However, exceptions may apply for relocations or other unique circumstances.
Can a Felon Get an FHA Loan?
Yes, felons can apply for FHA loans, but each case is reviewed individually. Learn more in our detailed blog post on Can a Felon Get an FHA Loan?.
Can You Buy a Foreclosure with an FHA Loan?
Yes, as long as the foreclosed property meets FHA standards for safety and livability. For more details, read Can You Buy a Foreclosure with an FHA Loan?.