FHA Loans and FHA Loan Requirements
The Copeland Mortgage Team in Lee's Summit helps homeowners secure FHA loans. FHA loans allow you to purchase a home with a 3.5% down payment, or refinance a home up to 96.5% of the home's value. FHA loans are easier to qualify for, and offer several homeowners an easy way to secure financing.
Basic Requirements for FHA Loans
You don’t have to worry about coming up with thousands upon thousands of dollars for a down payment if you qualify for an FHA loan. With a FICO score of at least 580 you only need 3.5% for your down payment. If your credit is between 500 and 579, you will need a 10% down payment on your loan. The FHA requires a debt to income ratio of less than 43% for borrowers with a steady income and proof of employment.
FHA Loan Qualifying
FHA loan requirements are more flexible than conventional loans and provide the easiest application. Below are the requirements for FHA loans:
- Need two years of consistent employment - preferred by the same employer
- Income over the past two years is the same, or increasing
- Credit guidelines vary; please ask The Copeland Mortgage Team for details
- Bankruptcies must be 2 years old; good credit since the bankruptcy
- Foreclosures must be 3 years old; good credit since the foreclosure
- Mortgage payment of your new home must be around 30% of your gross income
About FHA Loans
FHA loans originate from the Federal Housing Administration and are insured by HUD (US Dept. of Housing) so that lenders can offer more affordable mortgage rates. FHA loans require lower down payments and closing costs. There are even options for financing 100% of the loan, and several grant programs that provide FHA loan customers financing for the down payment.
FHA loans offer options to those who've undergone bankruptcy or foreclosure. They're available to first time homebuyers, refinancers and anyone who's purchasing property and doesn't already have an existing FHA loan. The guidelines for debt ratio and job qualifications are more lenient than a conventional loan.
See if you pre-qualify for an FHA loan today!
Refinancing your Mortgage with an FHA Loan
You may refinance your home loan with an FHA loan if you don't currently have an existing FHA loan. Refinancing options include fixed, adjustable (ARM) and buy-down mortgage rates, although most buyers have a fixed-rate FHA loan. Refinancing with an FHA loan is allowable even if you're late on your current mortgage or facing foreclosure.
If you have an FHA loan that originated before June 2009, you may qualify for a FHA Streamline refinance mortgage loan. This process is incredibly simple when compared to standard refinance or loan applications.
If you are currently over 4.5%, a new FHA program coud save you THOUSANDS!
Here are some benefits of a FHA Streamline Loan:
- Better loan terms
- You do NOT need an appraisal on your home, even if you are upsidedown
- You do NOT need to verify your income or employment
- Your credit score will NOT be pulled
To read more, visit our What is a Streamline FHA Refinance blog post and FHA Changes in June blog post.