What are the current requirements for FHA Loans?
FHA loan requirements are written to very straightforward and simple to follow. You will find some of the most useful information about today's FHA loan guidelines including income, credit and property requirements listed below.
To decide if you meet current FHA home Loan requirements for approval, lenders will look at:
- Your monthly income and your current monthly expenses. Standard FHA loan requirement debt-to-income ratios are 31/43. These ratios may be exceeded with compensation factors.
- Your credit history (standard FHA loan requirements for credit score are more flexible than other programs). A 620 FICO credit score is often required to obtain an FHA approval.
- To determine if the home meets FHA requirements for loan approval, an appraisal must be performed by a certified FHA appraiser. Only the lending institution may initiate the order for an appraisal to determine that the subject property meets FHA loan inspection requirements.
FHA Debt to Income Ratio Requirements
Currently, FHA loans requirements 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). 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.
FHA Loan Credit Score Requirements
Your credit background will be fairly considered. While the official FHA loan requirements for credit score states that the minimum FICO score for FHA loans is 580 for LTV ratios over 90 percent and 500 for LTV ratios below 90 percent, most lenders today will not approve mortgage loans to borrowers with credit scores below 620. It is possible for a borrower to be approved for an FHA Loan after bankruptcy, provided that the bankruptcy is at least two years out of discharge if Chapter 7 or one year out of discharge if Chapter 13 and all court ordered payments have been made on time.
FHA Loan Appraisal Requirements
For the subject property to be eligible for FHA loan approval, it must first be appraised by a certified FHA appraise r.
FHA loan property requirements for appraisals state that the home must be in fairly good condition. Things that could disqualify the subject property include a leaky roof, structural problems and/or damage, missing siding or paint and other issues. The appraiser must determine if the appraised value of the home meets or exceeds the maximum Loan-to-Value requirements for FHA mortgage loans. If the appraised value comes in below those requirements, the borrower could have to bring more money to the closing table.
Additional requirements for FHA Loans
Additionally, to meet current FHA loan eligibility requirements you must:
- Have a valid US Social Security Number (SSN)
- Be a legal U.S. resident Be at or above the legal age to sign on a mortgage per state law. There is no maximum age limit for a borrower.
Even if you are not a U.S. citizen, you must have a valid Social Security Number (SSN). A Tax ID number (ITIN) does not qualify as an acceptable substitute for a SSN.
FHA Loan Limits and Down Payment Requirements
The maximum loan amount under today's FHA loan requirements is determined by:
The maximum FHA loan amount: FHA approved lending institutions can not insure loans higher than the specified amounts listed for the metropolitan area or county where the property is located. The highest maximum FHA mortgage right now is $729,750. The lowest FHA maximum mortgage loan amount in any area 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 Requirements state that the maximum Loan-to-Value financing will be 96.5% of the lower of the purchase price or the appraised value of a home being purchased or 97.75% of the lower of the appraised value of the home or the amount you are refinancing plus closing costs of a home being refinanced. If you are refinancing and taking cash out . the loan will be limited to 85% of the appraised value.
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