Conditions You Must Meet to Qualify for an FHA Loan

FHA Loan in MinnesotaGetting a friendly loan to purchase a home used to be an extremely difficult thing to do many years ago. Fortunately, the Federal Housing Administration thought it was prudent to help lower income borrowers obtain a friendly mortgage that could have been otherwise impossible due to the pre-set qualifications.

Before FHA loans were established, homeowners had to part with 50% of the value of the property they intended to purchase. The interest rates were higher and this locked a lot of people out. But, FHA loans offer competitive interest rates to lenders as they are government-backed.

Unlike other mortgage options that have tough conditions, the agents from MortgageWaters.com say that FHA loans are ideal and have low down payment requirements. To qualify, you must have:

Credit Requirements

For you to qualify for a mortgage with a down payment of 3.5%, you need to have a credit score of 600 or higher. If you have a credit score that falls anywhere between 500 and 579, you must make a down payment of at least 10%. Credit scores can be easily checked online.

Down Payment

When purchasing a single family home, a duplex or even a condo, you must have a down payment of 3.5%. But, if you plan to purchase a multi-family building, you need at least 5% down payment.

Debt-Income Ratio

To qualify for an FHA loan, your debt to income ratio should not be more than 43%. This ratio considers your monthly income, monthly debt, and the monthly payment of your new house. In some cases, FHA allows for more than 43%.

Citizenship

For you to attain an FHA mortgage, you must be a U.S citizen and a resident of Minnesota, where you’ll be signing all the loan documents.

Getting an FHA loan is less complicated and has minimum requirements. Be sure to discuss your options with an experienced mortgage professional as he will guide you through the process and advice you on the best option depending on your income and home requirements.