Do you Meet the FHA Eligibility Requirements?
Buying a home is a huge step in any person's life. With lots of mortgage companies to choose from, it isn't always easy to figure out which loan will work best for your situation. In some cases, an FHA loan is the best choice. An FHA loan is insured by the government, requires a lower down payment and comes with a little more leniency when it comes to its lending standards. One of the most important questions to ask is, do I meet the fha eligibility requirements?
Minimum Credit Score
The first step to finding out if an FHA loan is right for you is finding out your credit score. Borrowers must have at minimum score of 500 to be eligible for the loan. In order to take advantage of the best interest rate, you need to have a credit score of 580 or above. Anything between 500 and 579 means that you can still qualify for the loan but you will need to come up with more of a down payment.
Amount of Down Payment
One of the best parts of an FHA loan is the fact that the down payment is only 3.5% of home's price. This money needs to be available at the time of setting up the mortgage. For individuals with lower credit scores, (between 500 and 579) will need to come up with 10% of the cost of the home as a down payment. If you are in the market for a home, this doesn't mean that you need the money right now. However, it is important to note that an FHA loan will require you to show documentation of your income, including the source of the down payment.
Primary Residence
An FHA loan is only available to individuals planning to purchase a primary residence. Property that is specifically for rental property or a secondary residence will not qualify. For most people, this is one of the easiest fha loan qualifications to meet. While this is a great loan for first time home buyers, it is also available for someone selling their current residence in order to purchase another home.
