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FEDERAL HOUSING ADMINISTRATION LOAN

What Is a FHA Loan?

The Federal Housing Administration issues a federal Housing Administration Loan or FHA, and it is created for low to moderate-income mortgagors. FHA requires a lower minimum down payment and a credit score.

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FHA Loans in Houston, TX

As of 2020, borrowers can get 96.5% of the value of a home with FHA loan, meaning they only need 3.5% for a down payment. If you are looking into FHA, you will need a credit score of at least 580. However, if your score falls somewhere between 500 and 579, you can still get FHA if you can provide 10% of the down payment.

Types of FHA Loans

Besides traditional first mortgages, the FHA offers other loan programs, such as:

    • Home Equity Conversion Mortgage (HECM) is a program that was created to help senior citizens aged 62 and older convert equality in their homes to cash while keeping the title to the property.
    • FHA 203(k) improvement loans factor the cost of certain repairs and needed renovations into the loan. This way, you’ll get the money not only for purchasing the property but also for its renovation.
    • FHA’s Energy Efficient Mortgage program is meant to provide upgrades that can lower your utility bills. These improvements can be new insulation or installation of solar or wind energy systems. The goal is to create an energy-efficient unit that will have lower utility bills and more available incomes for mortgage repayment.
    • Section 245(a) loan is aimed at those people who expect their incomes to increase over time. The Graduated Payment Mortgage begins with lower monthly payments that slowly increase.

Qualifying for an FHA Loan​

If you are interested in an FHA mortgage, then you will need to know the exact financial and employment requirements for your desired loan type. The general requirements include a FICO score of at least 500. Based on a range of 500 to 579, your required down payment will range between 3.5% to 10%. 

Before applying for an FHA loan, you’ll want to spend time building a good credit history. As a general rule, make sure you have at least 12 months of on-time payments and a debt-to-income ratio under 43%. 

We can help you review your current finances and determine whether it’s the right time to apply for a loan or if there are other steps you can take to increase your chances of approval. 

Don’t Let a History of Foreclosure or Bankruptcy Stop You

Neither foreclosure nor bankruptcy disqualify you from an FHA loan. You are still encouraged to submit an application so long as you meet the credit and income requirements. If you filed Chapter 7 bankruptcy, then at least two years must have passed before you can get approved for an FHA loan. 

The mortgage lender will look at your entire financial situation, not just your history. They will consider how you have made payments since foreclosure or bankruptcy and how you currently manage your debts and income. 

We can help you explore all your home financing options, no matter what your history may be. Our team is here to help everyone get the home they deserve.

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