|FHA Home Loans are available at lenders approved by the Federal Housing Administration. It is the lender who underwrites the mortgage and forwards the loan amount to the borrowers, under the guidelines set by the HUD. The interest rates, closing costs, discount points and all other issues are handled by the lenders alone.
Even the eligibility requirements may vary from one lender to another, but a homebuyer must have the minimum qualifications set by the United States Department of Housing and Urban Development. These may include a valid social security number and, US citizenship and attainment of the minimum legal age to sign on mortgage documents.
FHA Home Loans Requirements
FHA home loans requirements regarding eligibility, down payment, minimum credit score, home inspection and others must be fulfilled before a loan can be approved. For down payments, a buyer has to invest at least 3.5 percent of the property price in most cases. This is a requirement under Housing and Economic Recovery Act of 2008 and the handbook 4155.1 contains detailed instructions regarding the same. A special program that requires you to pay as low as $100 in down payment for purchasing a HUD home exists in Florida and some other states in Atlanta Homeownership Center jurisdiction.
FHA home loan credit requirements can be fulfilled by providing a three repository merged credit report (TRMCR), which mentions all credit, residence history and public records information of the borrower. Under certain circumstances, a Residential Mortgage Credit Report (RMCR) can also be used by the underwriter. A Non-Traditional Mortgage Credit Report (NTMCR), developed by either the lender or some third party agency, can also be used sometimes, however, it can never be used for a person with bad credit or for those having a poor payment record.
Other FHA Home Loans Requirements include acceptable income limits, which may vary from one state to another. The lender has a free hand in determining the borrower’s repayment capability by assessing their income, assets, liabilities and credit history. The guidelines regarding the same may be different for states like California, Arizona and Texas and also for different people, such as teachers and people with a history of bankruptcy or foreclosure in recent years.
An FHA home loans calculator, especially the one with taxes and insurance, can help one check their eligibility for the mortgage. One can also visit an approved lender to know the complete eligibility criteria applicable in their state. Moreover, they can also find from them additional information on application process, appraisals, fees, refinancing, loan modification program, restrictions and certain other rules.