Important FHA Guidelines for Borrowers
The FHA, or Federal Housing Administration, provides mortgage insurance on loans made by FHA-approved lenders. FHA insures these loans on single family and multi-family homes in the United States and its territories. It is the largest insurer of residential mortgages in the world, insuring tens of millions of properties since 1934 when it was created.
- FICO® score at least 580 = 3.5% down payment.
- FICO® score between 500 and 579 = 10% down payment.
- MIP (Mortgage Insurance Premium ) is required.
- Debt-to-Income Ratio < 43%.
- The home must be the borrower’s primary residence.
- Borrower must have steady income and proof of employment.
About FHA Loans
An FHA Loan is a mortgage that’s insured by the Federal Housing Administration. They allow borrowers to finance homes with down payments as low as 3.5% and are especially popular with first-time homebuyers.
FHA loans are a good option for first-time homebuyers who may not have saved enough for a large down payment. Even borrowers who have suffered from bankruptcy or foreclosures may qualify for an FHA-backed mortgage.
- Time to Get Started With an FHA Loan
- What Should I Know About Applying for an FHA Mortgage?
- How to Use an FHA Home Loan
FHA Credit Requirements for 2021
FHA Loan applicants must have a minimum FICO® score of 580 to qualify for the low down payment advantage which is currently at 3.5%. If your credit score is below 580, the down payment requirement is 10%. You can see why it’s important that your credit history is in good standing.
Keep in mind that FHA credit requirements cover more than just your FICO® score; they also determine eligibility based on a borrower’s payment history, bankruptcies, foreclosures, and extenuating circumstances that keep applicants from making timely payments.
What’s a FICO® Score?
The FICO® score is a number that represents a potential borrower’s creditworthiness. FICO® is a data analytics company which uses consumer credit files collected from different credit bureaus to compute their scores.
Your FICO® score is reviewed by lenders and is used to determine how likely you are to make timely payments on your mortgage. The higher the score, the better your chances are of getting a lower interest rate on your mortgage.ctcreditrepair.com….Prudent Choice Realty.