Hall Lending Group was created by Hope Hall with one mission in mind: to provide customers with the best home loan experience possible. For nearly two decades, we have been helping families meet their goals of home ownership with the best interest rates and loan programs available. We care about more than just your home loan. We take pride in making lending easy. We understand that family is important and that you want what is best for them. We make lending easy because you want to be the hero that gave your child their own backyard. We make lending easy because you want to spend more time with your family and less time on paperwork. We make lending easy because YOUR TIME MATTERS.
Borrowers who are interested in buying a home will find that the FHA loan requirements are not impossible to achieve. The requirements are set by the Federal Housing Authority. If you have a steady employment history or have worked for the same employer for at least the past two years, you are already ahead of the game. Lenders do like to see that you are able to start with something and stick with it. It makes it easy for them to believe that you will enter into a mortgage agreement and actually see it through to the end. In other words, they do not see a bankruptcy or a foreclosure in your future because they can see you have a steady income. Yes, things may happen along the way that may throw a wrench in your plans, but you do not have to worry. You have proven that you are not afraid to work for what you want, and you will do everything you can to make your dreams a reality. Steady employment makes you a good risk for a loan.
Even if something does happen to you financially or with your employment, FHA loan requirements allow the money for your down payments or even your payments to be gifted by family members. They may not even be required to co-sign on the loan if they can supply you with the money before the payment is due. The minimum down payment required for entering into an FHA loan is 3.5 percent. This is likely a lot lower than a conventional loan or mortgage. The minimum credit score required for the maximum financing of an FHA loan is 580. This is good news for a potential home buyer who has not gotten out from under their debt as fast as they would like. Many people in this situation believe they would have to forego buying a home because they will be rejected solely based on their credit and payment history alone. Unlike conventional loans and mortgages, this is not the case. Even if your credit score is lower than 580, you may get the FHA loan for a maximum LTV of 90 percent and a minimum down payment of 10 percent.
FHA loan requirements have strict guidelines for potential home buyers who are rebounding from a negative or less-than-flawless credit history. If you have declared bankruptcy, you must be at least two years out of the bankruptcy and have re-established credit with a good rating. If you have had a foreclosure in your financial history, you must be out of the situation for at least three years, and you should have good, re-established credit. If you were unable to sell your house during the foreclosure, this will not be considered an exception.
According to the FHA loan requirements, the property you are interested in purchasing must meet minimum standards of appraisal. The property must be appraised by an FHA-approved appraiser. Should the property being purchased not meet the appraisal standards, the seller will be asked to make the appropriate repairs. However, if the seller does not agree to repair the property at their expense, the potential buyer will be responsible for the cost. This must be paid at the property closing, and the money will be held in escrow until the repairs are complete.
Probably the most detailed FHA loan requirement is the borrower’s front-end ratio. This is the mortgage payment plus HOA fees, property taxes, mortgage insurance and homeowners insurance. All of this combined needs to be less than 31 percent of your gross income. If it is as high as 40 percent, you are required to provide justification as to why your mortgage would be an acceptable risk. Compensating factors should also be included. The borrower’s back-end ratio also ranks up there as a detailed requirement. It includes the mortgage plus your monthly debt, such as your credit card, car and student loan payments. Combined, it needs to be less than 43 percent of your gross income. However, it is possible to get it approved as high as 50 percent, with proper justification and compensating factors.