If you\u2019re considering using an FHA loan to make your home purchase, use this guide to understand what requirements you\u2019ll need to meet to qualify:<\/p>\n
<\/a><\/p>\n FHA loans are insured by a federal agency called the Federal Housing Administration. In order for them to insure a loan, the transaction must meet various FHA eligibility requirements<\/a> \u2014 both for the borrowers and the properties they\u2019re looking to buy.<\/p>\n Here\u2019s the standard underwriting criteria for FHA loans you\u2019ll probably need to meet to qualify:<\/p>\n Check Out: <\/i><\/b>First-Time Homebuyer Tips<\/i><\/b><\/a> As with most mortgage loans<\/a>, there are FHA guidelines regarding credit score, down payment, debt-to-income ratio (DTI), mortgage insurance, and the actual property being purchased. Here\u2019s more detail on each:<\/p>\n The minimum credit score you can have for an FHA-insured loan<\/a> is a 500, though you\u2019ll need to make at least a 10% down payment if your score is that low.<\/p>\n If your credit score is at least 580, however, you can have a down payment as low as 3.5% of the appraised value or sale price of the home.<\/p>\n For an FHA loan, you\u2019ll need a down payment of at least 3.5% of the home\u2019s purchase price or appraised value, whichever is lower. To make this minimum payment, you\u2019ll need at least a 580 credit score.<\/p>\n If your score is between 500 and 579, however, your required down payment will be 10%.<\/p>\n To qualify for an FHA loan, your debt-to-income ratio should be less than 43% \u2014 meaning your total monthly debt payments add up to no more than 43% of your monthly income. Lenders will also look at your housing DTI<\/a> or housing ratio, which can\u2019t exceed 31%.<\/p>\n This compares all of your housing-related expenses after taking out the mortgage to your monthly income.<\/p>\n In some cases, the FHA might allow for higher DTIs if you have what the agency calls \u201ccompensating factors.\u201d These factors include (but are not limited to):<\/p>\n FHA loans don\u2019t have income limits \u2014 they\u2019re available to any qualified borrower \u2014 but you must have two years of employment history. Lenders want to see that you\u2019re bringing in a stable income, and they\u2019ll verify that your income is likely to remain stable for the first few years of the loan.<\/p>\n For instance, the lender will use your current hourly rate if you\u2019re an hourly employee or annual salary if you\u2019re salaried to calculate your income. Overtime, tips, and commissions may also qualify if the income is consistent for the last two years.<\/p>\n You may need to show additional documentation \u2014 such as a business license or a profit and loss (P&L) statement \u2014 if you are self-employed.<\/p>\n FHA mortgage limits vary by county and the number of housing units. The FHA loan limit in 2022 for one-unit properties in low-cost areas is $420,680.<\/p>\n Single-unit homes in higher-cost areas can have a maximum limit as high as $970,800 for calendar year 2022.<\/p>\n To qualify for an FHA loan, the property must meet certain FHA requirements. Some of the property requirements include:<\/p>\n The property will also need to be appraised by an FHA-approved appraiser and meet specific durability requirements.<\/p>\n For example, a roof may need at least two years of physical life remaining to pass inspection. Or, the exterior may require new paint to correct an existing subsurface exposure.<\/p>\n FHA loans require a 1.75% of the loan amount upfront mortgage insurance premium at closing and a 0.45% to 1.05% of the loan amount premium you will pay each year for the life of the loan. The exact amounts depend on your loan size, loan term, and down payment.<\/p>\n\n You\u2019ll need to verify your identity and funding sources. Be ready to provide the following to your lender:<\/p>\n Your lender will also obtain your personal credit report and property appraisal summary. If you\u2019re initially ineligible for an FHA loan, here are a few strategies that can help improve your chances:<\/p>\nFHA loan requirements<\/h2>\n
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\n<\/a><\/p>\nHow to qualify for an FHA loan<\/h2>\n
FHA loan credit score requirements<\/h3>\n
FHA loan down payment requirements<\/h3>\n
FHA debt-to-income requirements<\/h3>\n
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FHA loan income requirements<\/h3>\n
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FHA loan limits<\/h3>\n
FHA property requirements<\/h3>\n
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FHA mortgage insurance requirements<\/h3>\n
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\n\t Loan amount
\n<\/strong><\/th>Annual premium for 15-year loan<\/strong><\/th> Annual premium for 30-year loan<\/strong><\/th>\n<\/tr>\n<\/thead>\n\n \n\t $625,000 or less<\/td> \n\t Over $625,000<\/td> FHA documentation requirements<\/h3>\n
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\n<\/a><\/p>\nWhat you can do if you don\u2019t meet FHA requirements<\/h2>\n