Some homebuyers may not be eligible for USDA financing due to location (not rural approved) or household income. The FHA mortgage is a great program to fill the gap for those buyers that are not USDA approved. FHA home loans are the easiest type of real estate loan to pre qualify for assuming you have the required 3.5% down payment needed. The FHA loan requirement guidelines for loan qualification are pretty flexible, below we outlined some details:
FHA Mortgage requirements:
- Two Years of steady employment, with no large gaps. Same line of work preferred, same employer not as important.
- Credit report should be minimum credit score of 620 or higher or in some cases no credit score at all.
- Bankruptcy’s must be at least three years old, with perfect credit since discharge. ( this wait time can vary from lender to lender)
- Foreclosure must be at least five years old, with perfect credit since. ( this wait time can vary from lender to lender)
- Your new mortgage payment should be approximately 30% of your gross (before taxes) income.
- Buyers will need at least 3.5% for a down payment. This down payment can be a “gift” received by family.
FHA Loan Advantages:
- Unlike USDA loans, there are no rural location requirements or household income limits.
- Relaxed Credit Guidelines – FHA loans can be done with credit scores down to 620. Sometimes a little lower if the applicant has more money to put down.
- Super Low Interest Rates and Low Monthly Mortgage Insurance – A distinct advantage of an FHA insured loan, as compared to a conforming loan, is great interest rates and lower monthly mortgage insurance (MI). Depending on the program, standard FHA loan interest rates are usually better than a conforming 30 Year Fixed loan.
- Safest ARM Currently Available on the Market – FHA guidelines give you the option of doing hybrid Adjustable Rate Mortgages (ARM), including a 5/1, 3/1 ARM and a one year ARM that has the lowest adjustment caps of any ARM in the industry. In addition all the common fixed rate options are available as well.
- Variety of Property Types Allowed – While FHA Guidelines do require that the property be Owner Occupied (OO), they do allow you to purchase condos, planned unit developments, manufactured homes, and 1-4 family residences, in which the borrower intends to occupy one part of the multi-unit residence.
- Streamlined FHA Refinance and Assumable Loans – One of the most important advantages of an FHA loan is the ability for the loan to be assumed. This gives the buyer a significant advantage in a high interest rate market. FHA loans are eligible for streamlined refinance, a program HUD offers that allows the borrower to easily refinance the loan to reduce their interest rate and lower their monthly payment.
- Closing Costs – FHA allows the home seller to pay up to 6% of the buyers closing costs!
Serving all of FL, including South Florida – Jensen Beach, Jupiter Island, Ocean Breeze Park, Palm City, Sewall’s Point and Stuart. Belle Glade, Boca Raton, Boynton Beach, Briny Breezes, Canal Point, Cloud Lake, Delray Beach, Glen Ridge, Golf, Greenacres, Gulf Stream, Haverhill, Highland Beach, Juno Beach, Jupiter, Lake Clarke Shores, Lake Park, Lake Worth, Lantana, Loxahatchee, Manalapan, Mangonia Park, North Palm Beach, Ocean Ridge, Pahokee, Palm Beach, Palm Beach Gardens, Palm Beach Shores, Palm Springs, Riviera Beach, Royal Palm Beach, Sandcut, South Bay, South Palm Beach, Tequesta, Wellington and West Palm Beach. Coconut Creek, Cooper City, Coral Springs, Dania Beach, Davie, Deerfield Beach, Fort Lauderdale, Hallandale Beach, Hillsboro Beach, Hollywood, Lauderdale Lakes, Lauderdale-By-The-Sea, Lauderhill, Margate, Miramar, North Lauderdale, Parkland, Pembroke Pines, Plantation, Pompano Beach, Port Everglades, Southwest Ranches, Sunrise, Tamarac, West Park, Weston. FHA Mortgage – Fills the Gap