Now that you’ve decided to finally buy that home that you always wanted for your family, doing all the required market research and finally settled on applying for an FHA home loan. While the FHA guidelines to qualify for a home loan might be less stringent than other private enterprises of similar nature, there are still some bare requirements to be met which end up being a sizable list.
We’ll do a brief discussion regarding the fundamental FHA loan requirements here so that you can have a clear picture on where you stand in the qualifying process and which direction you should take to get the loan successfully.
The first thing that you need to determine is your credit score. A borrower can quickly achieve the prevailing 3.5% down-payment rate as long as his or her credit rating is 580 and above. Credit ratings below these numbers result in the standard 10% down payment, so this is the first requirement that should be met to utilize the benefit of paying the minimum down payment on the mortgage.
Down Payments and Down Payment Gifts
With a readily achievable credit rating of 580 that results in borrowers putting the least money down of any loan on the market, make sure that you can afford the down payment. If it’s too stressful on your part to pay the down payment alone, you can utilize the Down Payment Gift benefit and bring in extra outside finances to seal the deal without drawing up additional procedures and documentation
MIP (Mortgage Insurance Premium)
This is a fundamental and essential document you need to have if you plan to apply for an FHA home loan. There is an upfront payment of 1.75% of the loan amount and monthly payments involved with this insurance. The FHA mortgage insurance premium is for the life of the loan and cannot be canceled.
Closing costs are the costs associated with the closing of the mortgage agreement. A couple of factors that are involved in the process are origination fees and appraisal costs. Generally, the closing costs may range between 2%-3% of the purchase price depending on third-party vendor’s conditions and agreement. Since this is a significant cost associated at the end of the affair, it is generally considered a good idea to have multiple offers at hand to compare and find the best option that works out for you.
If a potential borrower can ensure these few basic FHA guidelines, the required conditions for securing the loan can be easily met. Do you qualify for an FHA loan? Give your nearest FHA Loan Specialist a call, and they’ll help you find out.