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.

Loan Term

A loan term is the period during which a borrower makes monthly payments on a home loan. It can change based on the borrower’s payment habits and refinancing.

Discount Points

Discount points are upfront fees you pay to lower your mortgage’s interest rate. Each point costs 1% of your loan amount and helps reduce monthly payments.

Credit Report

Credit reports detail an individual’s credit history and payment behavior. Lenders use these reports to assess the risk of a borrower defaulting on a home loan.

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