FHA loans are federally backed mortgages meant to ease buying a house by lowering buyer-qualification guidelines. They open the house market to people with lesser incomes or issues within their credit histories. While the credentials are reduced, they do exist, so prior to applying for an FHA loan, it’s a fantastic idea to do some type of self-check. Examine your current financial status contrary to the fundamental qualifications for the loan to ascertain whether you qualify.
Determine whether the house you are funding will serve as your primary residence. To get an FHA loan, you need to be an occupant in the residence, and it must be your primary residence as well. No investment properties are allowed under this program.
Assess the maximum mortgage amount for your area prior to applying. If the house exceeds that amount, you do not qualify for an FHA loan for that residence.
Order your credit report and analyze it closely. There’s no minimum credit score needed for an FHA loan, but you do need a proven ability to pay bills in a timely fashion. Black marks in your credit report can disqualify you from the FHA loan application. Foreclosures should have taken place more than three years before program and bankruptcies two years, both with credit histories because the event.
Assess your earnings and look at your employment history. You wish to reveal lenders a consistent work history for 2 years prior to applying for the loan, as well as anticipated job for three years following loan approval. Your earnings should also be enough to pay the anticipated monthly payments without inducing overdue strain. Collect two years’ worth of tax returns and an up-to-date balance sheet to show a creditor if you’re self-employed.
Reduce your debt-to-income ratio below 45 percent by paying off credit cards or cards prior to applying for the FHA loan. Furthermore, make certain that you have enough savings available to make the 3 1/2 percent deposit required by the FHA.