How to Qualify for an FHA Loan
How can I qualify for an FHA Loan?
To determine if you qualify for an FHA Loan, lenders look at:
- Income Qualifications - Your income and your monthly expenses. Standard FHA Loan Qualification debt-to-income ratios are 31/43. These ratios may be exceeded with compensation factors. Your income before taxes will be used to determine how much you can qualify for.
- Credit Qualifications - Your credit history (this is important, but FHA's credit standards are flexible). A 640 FICO credit score is required to obtain an FHA approval.
Current FHA Loan Qualifications state that your monthly housing costs (mortgage principal and interest, property taxes and insurance) must meet a specified percentage of your gross monthly income (31% ratio). Your credit background will be fairly considered. You must also have enough income to pay your housing costs plus all additional monthly debt (43% ratio). These percentages may be exceeded with compensating factors.
What is the
maximum amount that I can borrow?
The maximum loan amount under today's FHA Loan Qualifications is determined by:
Maximum FHA loan amount: By law, FHA Lenders cannot insure loans that exceed certain amounts based on the metropolitan area or county in which you live. The highest maximum FHA mortgage right now is $729,750. The lowest FHA lender maximum amount available in any county is $271,050. To see what the limit is in the county in which you're interested, visit the following site https://entp.hud.gov/idapp/html/hicostlook.cfm . This site lists U.S. territories as well as states.
Maximum FHA Financing: Depending on the state where the property is located, FHA Loan Qualifications state that the maximum financing will be 97.75% of the lower of the purchase price, the appraised value of the home or the amount you are refinancing plus closing costs. If you are refinancing and taking cash out . the loan will be limited to 85% of the appraised value.Source: www.fha-101.com