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.

Single Family Home

A single-family home is an unattached dwelling. For an FHA loan, it must be owner-occupied, meaning the borrower intends to use it as their primary residence.

Loan Balance

Your loan balance is the amount you still owe on the original mortgage. Part of your monthly payments goes towards reducing this balance.

Balloon Payment

Balloon loans involve regular monthly payments, but a large lump sum is due at the end of the term. That final payment is much bigger than the monthly ones.

FHA Minimum Standards

HUD requires that homes financed with FHA mortgages meet minimum standards. The property must be safe, secure, and sound for the loan to be approved.

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