FHA LOAN

If you have a short credit history or have had  issues with your credit in the past, FHA loans are a great option. The minimum credit score to qualify for an FHA loan is 500. 

FHA requires its borrowers to take out mortgage insurance. FHA’s mortgage insurance program has two types of fees: An up-front mortgage insurance premium equal to 1.75 percent of the loan amount and an annual mortgage insurance premium equal to 1.35 percent of the outstanding loan balance depending on loan amount, loan term and LTV.

With a credit score of at least 580, a down payment of as little as 3.5 percent is possible. If your credit score is between 500 and 579, you will need to make a 10 percent down payment.

FHA loans come in 15-year and 30-year terms with fixed interest rates. This means the interest rate will stay the same over the life of the loan.

Have a FICO score of 500 to 579 with 10 percent down, or a FICO score of 580 or higher with 3.5 percent down.

Have verifiable employment history for the last two year and verifiable income through pay stubs, federal tax returns and bank statements.

FHA loans must be used to finance a primary residence. Ensure the property is appraised by an FHA-approved appraiser and meets HUD (Department of Housing and Urban Development) guidelines.

Have a front-end debt ratio (monthly mortgage payments) of no more than 31 percent of gross monthly income and a back-end debt ratio (mortgage plus all monthly debt payments) of no more than 43 percent of gross monthly income.