Many people believe that FHA loans are only for first-time buyers, and that’s incorrect. While FHA loans make it easier for first-time homebuyers to get the keys to their first home, this type of loan can be used by homebuyers looking for low down payment requirements.
This article will explore the ins and outs of FHA loans.
Who Can Use FHA Loans?
Although the Federal Housing Administration (FHA) loan program’s primary customer base is first-time homebuyers, FHA loans are not limited to them. People who have previously owned property can use FHA loans to purchase another property as long as it is their primary residence.
This type of home loan appeals to first-time homebuyers because of the attractive 3.5% down payment, which is an alternative for those who don’t qualify for a conventional loan. To reiterate: any homebuyer can apply for this FHA loan as long they meet the minimum requirements.
FHA Loan Requirements
While FHA loan criteria are notoriously less rigid than your bank’s usual loan criteria, there are some requirements you need to meet to qualify.
Lenders will start the process with a basic check all mortgage applicants go through. You will be checked for a valid Social Security Number, resident status, and legal age. Other requirements you need to meet are:
- Credit score and down payments. Unlike other mortgages, FHA loans are available to homebuyers with lower credit scores, going as low as 500. However, with a credit score this low, you will be looking at a higher down payment of 10%. For those with a credit score of 580 and higher, the minimum down payment is 3.5%.
- Debt-to-income ratio. To qualify for an FHA loan, you need a debt-to-income ratio (DTI) of less than 50%. If you have a DTI higher than 50%, your loan options may be more limited or come with higher interest rates and down payments.
- Income requirements. There is no minimum or maximum income needed to qualify. However, you must be able to prove an income history of at least two years (pay stubs or tax returns), have a credit history, and have no delinquent federal debt or judgments.
- Loan limits. To qualify for this loan, the property you intend to purchase must meet the FHA loan limits, which vary according to state. For example, in Broward County, FHA loan limits for a one-unit property are $654,350, whereas Monroe County starts from $967,150.
Purchase Your Dream Home with a FHA Loan in Florida with Florida State Mortgage Group
Ready to start the FHA loan application process? The expert team at Florida State Mortgage Group will guide you through the whole process. Give us a call at (954) 359-3000 and purchase your dream home.
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