Eligibility

Eligibility

Before applying for any type of loan, it’s important to review the eligibility requirements. To qualify for a new FHA mortgage or an FHA refinance, borrowers must meet certain criteria.

Several factors determine eligibility for FHA home loans:

  • Price Ceilings: The FHA sets various price caps for the purchase price of homes, which vary by location and are regularly updated.
  • Credit Score Requirements: While the FHA allows lower credit scores compared to conventional loans, applicants with a score below 580 are required to make a minimum down payment of 10% or more.
  • Income and Employment Verification: FHA loans require borrowers to provide proof of steady employment to demonstrate “effective income.” This ensures that borrowers have a reliable source of income to support their mortgage payments.
  • Primary Residence Requirement: The property being purchased or refinanced must serve as the borrower’s primary residence. The FHA mandates that the property must be an owner-occupied dwelling.

 

The FHA loan program is known for its flexibility regarding borrower eligibility, making it an attractive option for many first-time homebuyers.

Down Payment

The down payment is the money you pay upfront to your lender when buying a house. It varies based on what you can afford and the lender’s requirements.

Freddie Mac

Freddie Mac is a government agency that buys mortgages from lenders. This helps lenders provide more loans, making homeownership more affordable for many people

Mortgage

When buying a new home, most people apply for a mortgage. This loan allows you to borrow money for the property and repay it with monthly payments plus interest

Annual Income

Your annual income is everything you earn in a year, like wages, salary, tips, bonuses, and overtime. For mortgages, lenders mostly look at wages or salary.

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