How to Qualify for a FHA Home Loan

Why the Sudden Popularity in a FHA Home Loan?

The FHA increased their lending limits, home prices are lower than they were before 2009 and low down payments have made a FHA home loan more popular recently. Due to the changes in the housing market and within FHA, more home qualify for a FHA home loan than ever before.

Traditional home loans have become stricter, require more money down and require higher credit scores, forcing many home buyers to seek out less-restrictive home loan options, such as an FHA home loan.

Currently, in 2013, the housing market is on the rebound and home buyers can still benefit from lower down-payment requirements offered by the FHA. Low down payments are the main reason the FHA has gone from holding 3% of the housing market to 50% of the housing market today.

There is talk out there about changing the FHA home loan program to increase down payment requirements, to require higher credit score and to increase FHA insurance premiums. However, it takes an act of Congress in order to change the FHA home loan requirements, and with all the nation’s budget problems right now, it may be a while before Congress has time to think about FHA.

This is a huge incentive for home buyers to buy while things are still in the buyers favor. So, if you are looking to buy a home for yourself or for investing in real estate, now is the time to contact RealtyFox.com in Palm Beach County Florida.

Here is what home buyers need to know about qualifying for a FHA home loan:

  1. You don’t have to be first-time home buyer to qualify for a FHA home loan.
  2. FHA home loan requires a low down payment of only 3.5% and it is acceptable if the buyer got the down payment as a gift. This is a great advantage for a home buyer looking to get a home quickly, before the market changes. great advantage. “You can get a gift from an Monetary gifts have to be from a reputable source, such as an employer, relative, a nonprofit or government agency offering assistance with down payments, typically for first-time homeowners
  3. The FHA insures mortgages with private mortgage insurance so, lenders are more likely to offer loan terms that make it easier for home buyer to qualify.
  4. First-time home buyers have some additional advantages. The biggest being the acceptance of a co-signer on the home loan. If the home buyer is fresh out of college and has little to no credit at all, a parent can co-sign for their adult child. The young adult can assume the home loan at a later date when they are more financially stable. Additionally, the young adult can assume the home loan without having to refinance, avoiding a possibly higher interest rate.
  5. With traditional home loans, the seller can only contribute 3% of the purchase price towards closing costs. Whereas, with a FHA home loan, the seller can contribute up to 6% of closing costs.
  6. FHA limits the amount a home buyer can borrow. Limits vary based on the state, county and the variety of housing types in that area. The 2013 HFA lending limit for a single family home in Palm Beach County, Florida is $423,750. To find the lending limits of another county or state, go HERE.
  7. To qualify for a FHA home loan, the home buyer will need to verify their income and debt. The FHA does have stricter rules regarding income than traditional mortgage lenders. Debt to income ratio must be between 31% and 43%, the amount of a home buyer’s income that goes towards paying all debt in which payment are recurring, including the pending mortgage.

If you are a home buyer of moderate-income, a FHA-insured home loan is probably the most viable option. Contact RealtyFox for assistance in buying a home. Call 561.234.5678.