Homebuyers who want to review mortgage loan options start with the FHA program. Borrowers who have less than average credit scores might qualify for the FHA program and fulfill their dream of becoming homeowners. Reviewing what to expect from an FHA mortgage helps borrowers determine if it’s the best choice for their real estate investment.
What are FHA Mortgage Loans?
The Federal Housing Administration backs the FHA home mortgages and provides funds for buyers to purchase residential properties. The program helps buyers who don’t have the greatest credit ratings but have the income to qualify for the loans. The loan products help homeowners who would otherwise not qualify for a mortgage get a loan if they have the income-to-debt ratio to help them qualify for the loans.
What are the Eligibility Requirements?
Today, consumers can qualify for the FHA home mortgages with a credit score as low as 500. However, what buyers must understand is that if they have a lower than average credit score they will pay more down. According to the current requirements for the mortgage loans, the borrower can pay as low as 3.5% down to secure the loans. Lenders will review the borrower’s credit history and income to determine how much the borrower must pay down for the mortgage loan.
The employment verification process determines if the applicant presents factual information to the lender. To qualify for the loan, the borrower must have a steady work history. The loan program requires the worker to be employed for no less than two years with the same company or organization. The borrowers must also be a lawful citizen of the US. The funds acquired through the mortgage home loan must pay for a primary residence and not a vacation home. Their income-to-debt ratio must be no more than 31%.
If the borrower filed for bankruptcy, at least two years must have passed before the borrower can get a new mortgage through the FHA program. At least three years must pass after a foreclosure before the borrower applies for a new mortgage.
Appraisals and Property Inspections
The mortgage lender requires the borrower to get an official appraisal for the property. The findings of the appraisal must show that the property meets the necessary criteria. It must show that the property is worth the asking price and won’t present a risk to the mortgage lender.
The property inspection is completed after the seller accepts the buyer’s offer. The inspection must show that there isn’t serious damage to the property that lowers the value of the property. When negotiating with the seller, the buyer can get the seller to perform the repairs. A copy of the property inspection is sent to the mortgage lender, and the lender determines if the property meets the necessary criteria.
Homebuyers apply for an FHA mortgage to get a new home if they have a credit score of at least 500. The borrower must provide income statements and fulfill all eligibility requirements to qualify. Homebuyers who want to learn more about the home mortgage programs can get details from Dustin Dimisa now.