FHA Loans

Requirements for FHA loan

Down payment:  

3.5% minimum down payment with a credit score of at least 580-620.  

10% down payment is allowed with a credit score between 500 and 579. The down payment can come from your own bank accounts, a gift from a relative, and even local down payment assistance programs.

Debt-to-income ratio:

Front-end ratio is 31% -housing-related costs, such as the monthly mortgage payment, property taxes and insurance.

Back-end is 43% - all monthly debt, including housing costs, car loans, credit card payments and any other recurring debt.

Employment:

Steady income and proof of employment for the last two years, with explanations for any frequent changes in employment.

Mortgage insurance:

2 mortgage insurance premiums on FHA loan

Upfront mortgage insurance premium 

Monthly mortgage insurance- pay every month for the life of the loan. 

*The upfront mortgage insurance premium is 1.75% of the loan balance due at closing and is usually financed into your loan. If you make the 3.5% minimum down payment, you’ll pay an annual fee of 0.85% of the total loan amount. This will be divided by 12 and is part of your monthly payment for as long you have the FHA loan.