An FHA mortgage is a mortgage loan that is insured by the Federal Housing Administration (FHA). The FHA insures mortgages to help protect lenders and borrowers from financial loss in the event that the borrower defaults on the loan. However, not everyone can get an FHA mortgage. The FHA only insures certain types of mortgages. If you think you may be a good candidate for an FHA mortgage, read on and find out whether you can get it.
Who Can Get An FHA Mortgage
You can get an FHA mortgage if you meet the following criteria:
Your credit score – Your credit score is the most important factor in determining if you’ll be approved for an FHA mortgage. A low credit score (below 620) can significantly decrease your chances of getting approved for an FHA mortgage. Your credit score must be above the lower limit of 620 to be eligible for an FHA mortgage. Currently, the lowest credit score that lenders are allowed to report to the credit bureaus is 620.
Your income – Your income is another important factor in determining if you’ll be approved for an FHA mortgage. If your income is below the FHA’s guidelines, you will be denied an FHA loan. Your annual income must be less than or equal to the median income for your area.
Where you live – Most lenders will not offer you an FHA loan if you live in an expensive city or in a high-cost area, like the Bay Area.
FHA Mortgage Guidelines
Most FHA mortgages require at least 3.5% of the purchase price of the home as a down payment. This amount is referred to as the down payment (down) amount. You can choose to put even more down if you’re approved for a higher loan amount.
Your interest rate will be an average of the interest rates offered by lenders based on the terms of your loan. Typically, your loan will be an average of a fixed rate and a variable rate. The minimum home value for an FHA mortgage is $151,000. However, you can usually get approved for a loan above this amount.
The loan term for your FHA mortgage should be at least 10 years. The lender pays for the majority of your closing costs, which include the cost of the title insurance and appraisal. However, if your down payment is more than 3.5% of the purchase price, you must pay for at least these three items out of your own pocket. The portion of your payment that goes toward your monthly mortgage payment should be at least 10% of your gross income.
How To Get An FHA Mortgage
Before looking into getting an FHA mortgage, you should make sure that you meet the requirements listed above. You can get your credit score and see if you meet the requirements on Maine FHA Mortgage. Once you’re approved for an FHA mortgage, your lender will issue you an MICA. Your lender must then apply for the FHA insurance for your loan. When your lender submits the application to the FHA, the FHA inspects the loan and approves it if it meets their guidelines. Within days to weeks, the FHA will send you a letter confirming that your loan has been approved. If you want to learn more, click here.