FHA mortgage lending services provide first-time home buyers with an affordable mortgage. Most of these buyers have to meet specific requirements before they can be approved for an FHA home loan. The following qualifications reflect the most recent changes in the program, as well as special circumstances that may affect eligibility.
The Program Overall
For the most part, not many changes have been made to FHA in the last five years or so. Even with HUD's recent restructuring, and changes in making FHA paperwork more streamlined, the requirements have not changed.
In short, to qualify for FHA:
- You must be a first-time homebuyer
- You must meet the income guidelines
- Your FICO (credit) score must be 580 or above to qualify for the 3.5% down payment (instead of 10%)
- A FICO score of less than 580 means that you need a minimum of 10% down payment to get the loan
- Steady income and proof of employment
- Low debt to income ratio
- Carry MIP insurance
That is a lot of hoops through which to jump, but it helps when your credit score is not high enough to qualify for a traditional mortgage or loan.
There are some special considerations that the FHA takes into account when trying to make a decision about your application. These special circumstances are both life-changing and can affect the FHA's decision for the better or for the worse. While these changes impact whether or not you can buy a house right now, you should not give up. You can always reapply to FHA if you are denied under the following special circumstances.
You inherit a lot of money.
Inheriting a lot of money is often fantastic. It also means that you do not need a mortgage loan. FHA sees your inheritance as "income," which is often a reason for denying an application.
You lose a dependent.
Shifts in the number of people who will be living in the home causes changes in the income guidelines for your home. Perhaps you had three children prior to applying for the loan, and one child passed away unexpectedly. The accepted income level for a family of five no longer applies. While this seems unfair, the FHA still has to follow its eligibility requirements and deny the application (unless you still qualify with four family members).
You lose an income or job.
Additionally, if an adult loses his or her job, leaves the family unit, or loses his or her life, it affects your application. Without stable employment and steady income, you can be denied. If your employment history and income are enough by yourself, then you still have a chance.