Approximately 40% of all home loans in the US are through the Federal Housing Administration (FHA). FHA Loans are some of the easiest types of mortgage loans to qualify for because they require a low down payment and the borrower can have less-than-perfect credit.
2021 FHA Loan Requirements:
- 500 to 579 FICO score requirement* and 10% down payment
580 or above FICO score requirement with least a 3.5% downpayment
- An appraisal must be done by an FHA approved appraiser
- Mortgage insurance (MIP) usually around 0.85 percent of the loan amount annually
- Steady employment with proven income with recent tax returns, W2’s, and paycheck stubs
- Two years of employment at the same company
- Must occupy the home as primary residence
- At least 18 years of age
FHA Loan Advantages:
- They are very popular for first-time home buyers because of their flexible qualifying guidelines and low down payments
- Borrowers with credit scores as low as 500 can qualify for an FHA loan
- Lower income borrowers are able to get approved for a home loan through the FHA due to the FHA allowing lenders more flexibility on debt to income ratios than conventional mortgages
- Lower interest rates when compared with conventional loans, which can result in large net savings over the lifetime of a loan
- Lower loan limits
- Homes that need renovations do not qualify
- Mortgage insurance is required and Mortgage insurance costs are higher upfront
- More required paperwork
Also, take a look at FHA loan questions from other borrowers that we’ve helped. Hope this info helps and don’t forget, we’re here to help if you have any more questions.
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