|FHA Requirements are different for different categories of buyers and for different financing situations. The requirements also vary according to the type of a property one chooses to buy in assistance with a FHA-approved lender. The properties allowed are single family homes and condominiums, which must be owner-occupied. There are detailed HUD guidelines for issues like appraisal and inspection, which a professional must follow completely to fulfill underwriting requirements of an FHA-insured mortgage.
Separate guidelines exist in different HUD Handbooks and Mortgagee Letters to let people know about FHA requirements for buyers, sellers, appraisers, condos, manufactured homes, mobile homes, new construction, well and septic, septic systems, pools, windows and down payment. Browse our website to get information about these resources and how you can find them on the web.
FHA Requirements 2011
New mortgagee letters have been released in 2010 stiffening the credit score requirements and putting the responsibility more on the lenders for cases in 2011. According to the new guidelines, the minimum credit score to qualify for an FHA-insured loan under normal condition is kept at 500. A person below this standard is not qualified for FHA mortgage insurance.
An exception to this rule may be the first time home buyers or young borrowers who generally do not have sufficient credit to meet the necessary requirements. A non-traditional credit history must be created and compliance to other guidelines must be thoroughly checked before underwriting loans for them.
FHA Requirements Credit Score
Even a FICO credit score of 500 may not help you qualify for the maximum financing. You will have to put down at least 10 percent of the purchase price, probably from your own fund, in order to close the transaction.
To avail the usual 3.5 percent down payment that is customary with the FHA loan, a borrower needs to have more than 580 credit score. Many lenders may require even more, sometimes between 620 and 640, to allow a 3.5 percent down payment.
Under special programs, such as 203(h), which is meant for disaster victims, a person is able to qualify for 100 percent financing at no down payment at all if he/she has at least 500 credit score.
Moreover, it is also possible to apply for FHA mortgage insurance even after foreclosure, short sale or bankruptcy. However, the borrowers need to wait for at least 2 to 3 years before they can be considered eligible for a loan insured by the Federal Housing Administration.