Common Questions About Qualifying for an FHA Mortgage
August 16, 2023
There are some common questions many first-time borrowers ask about the FHA home loan program. If you’re considering buying or building a home from the ground up, you’ll want to compare your home loan options carefully.
Some mortgages are better for those who want to save money out of pocket at the start of the mortgage, other FHA home loans may be good for those who want to renovate their home or buy a fixer-upper they can convert into a primary residence.
How Do I Qualify for an FHA Mortgage?
You’ll want to get familiar with FHA loan requirements, such as the FICO score range for the lowest down payment. On paper, the FHA says that requirement includes having FICO scores at 580 or higher. The lender may require FICO scores above the 580 range for the most favorable terms, so you must shop for a lender who can work with your circumstances.
Other general qualifying terms for an FHA loan include the following:
Borrowers who like the lower down payment options of government-backed mortgage loan programs like VA, USDA, and FHA may wonder what the differences are between these mortgage programs.
VA home loans aren’t offered to the general public, so typically, unless you are a military member, veteran, or qualifying spouse, you aren’t offered the option.
USDA mortgages are generally offered as need-based loans for those who meet household income restrictions and other requirements.
The FHA mortgage loan program has no such restrictions. It is not a need-based mortgage program. FHA home loans are offered to both first-time and experienced homeowners and are intended strictly for the purchase, construction, renovation, or refinance of a residence.
What About Using a Co-Borrower?
Some worry about credit and their ability to qualify for a loan with their current FICO score range. They may be tempted to turn to a co-borrower or cosigner for an FHA mortgage, but it’s important to understand that all applicants on the note must be able to credit-qualify for the loan with their FICO scores and credit repayment history. The credit strengths of one applicant do not offset low FICO scores for any co-borrower.
It’s smart to work on your credit well ahead of a loan application, no matter how strong you feel your current scores might be. Remember that a co-borrower is not the same as a co-signer, and there are definite considerations to make if you must choose between one or the other.
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Some mortgages are better for those who want to save money out of pocket at the start of the mortgage, other FHA home loans may be good for those who want to renovate their home or buy a fixer-upper they can convert into a primary residence.
How Do I Qualify for an FHA Mortgage?
You’ll want to get familiar with FHA loan requirements, such as the FICO score range for the lowest down payment. On paper, the FHA says that requirement includes having FICO scores at 580 or higher. The lender may require FICO scores above the 580 range for the most favorable terms, so you must shop for a lender who can work with your circumstances.
Other general qualifying terms for an FHA loan include the following:
- Being in the job market for two years or more.
- Having the same basic type of earnings (salary, commission, hourly, self-employment income) for two years or more.
- You want to buy a home and not an investment property.
- You aren’t maxed out on your credit, such as credit cards and personal loans.
Borrowers who like the lower down payment options of government-backed mortgage loan programs like VA, USDA, and FHA may wonder what the differences are between these mortgage programs.
VA home loans aren’t offered to the general public, so typically, unless you are a military member, veteran, or qualifying spouse, you aren’t offered the option.
USDA mortgages are generally offered as need-based loans for those who meet household income restrictions and other requirements.
The FHA mortgage loan program has no such restrictions. It is not a need-based mortgage program. FHA home loans are offered to both first-time and experienced homeowners and are intended strictly for the purchase, construction, renovation, or refinance of a residence.
What About Using a Co-Borrower?
Some worry about credit and their ability to qualify for a loan with their current FICO score range. They may be tempted to turn to a co-borrower or cosigner for an FHA mortgage, but it’s important to understand that all applicants on the note must be able to credit-qualify for the loan with their FICO scores and credit repayment history. The credit strengths of one applicant do not offset low FICO scores for any co-borrower.
It’s smart to work on your credit well ahead of a loan application, no matter how strong you feel your current scores might be. Remember that a co-borrower is not the same as a co-signer, and there are definite considerations to make if you must choose between one or the other.
------------------------------
RELATED VIDEOS:
Disclosures Give Transparency to Borrowers
Understanding the Purpose of Your Mortgage Down Payment
Putting Money Into Your Escrow Account
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