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FHA Loan Eligibility

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Find Out The “Who” And “What” Of The FHA Loan Requirements

If you’re wondering what the FHA loan requirements are to finance your home, we can help. The federal government backs these loans so that lenders have some flexibility in the terms. Take a look at some of the benefits these loans have to offer:

  • FHA purchases can have as little as 3.5% down payment
  • Qualifying may be easier than for conventional loans
  • Competitive interest rates
  • Costs limited by FHA to what is fair, reasonable, and customary.
  • No charge for early pay off or extra payments toward principal
  • Financing on primary residences
  • Streamline refinancing available

In order to get these great benefits, you must have FHA loan eligibility. A lot of people believe that FHA loans are for low-income families or just for first-time homeowners. But, if you read on, you’ll find out that’s not the case.

Who’s Eligible For the FHA Mortgage Program?

FHA borrower eligibility has mostly to do with where you live and where you work. For starters, you must be a legal U.S. resident. And, you need a valid Social Security number. Finally, you must be at least 18 in most states to sign a mortgage.

You’ll need to show proof of residency. Lenders will often ask for several utility bills with your name and legal address on them. You can show you can work legally in the U.S. by presenting a valid Social Security card. You’ll be asked for pay stubs and tax returns for qualifying purposes.

Once it’s determined that you are eligible, you can begin applying for this kind of loan. Eligibility simply tells us if you can be considered for one of these loan programs, but it has nothing to do with qualifying for a mortgage.

FHA Loan Qualifications

Basically, you’ll need ample income and credit, and a proven financial track record to show you have the ability to repay for a loan. Based on your income and credit credentials, an experienced loan professional can determine how much loan you can qualify for.

To learn if you’re eligible for qualifying, call us at 1-866-663-0826.

Eligible Uses For FHA-insured Mortgages

Eligibility isn’t just about the borrower. The property must also fit FHA requirements. The single-family loan programs can be used to finance properties with up to four units. The program is intended to finance owner-occupied principal residences only. FHA insures mortgages for these kinds of properties:

  • Detached or semi-detached homes
  • Townhouses or row houses
  • Single units within FHA-approved condominium complexes

Property Eligibility is two-fold. It must be the right type and meet FHA standard for code and durability.

Here are some of the acceptable ways people have used FHA home loans:

1. Purchasing a First Home – For many people who want to buy a home, a common hurdle is coming up with enough cash to put down. With FHA-insured mortgages, borrowers can pay as little as 3.5% down. A low down payment may make the dream of homeownership more reachable for first-timers.

2. Buying Rental Properties – Additionally, these loans can be used to purchase a multiplex with up to four units. This makes it possible for homeowners to live in one unit and rent out the other three to earn income.

3. Financing a Fixer Upper – Unlike some other loan programs, FHA allows borrowers to purchase fixer uppers. You can buy a house that needs a little TLC and include up to $35,000 of repair costs into one loan. This kind of loan is available to homeowners who intend to occupy the home. Not all lenders offer this option.

4. Getting Financial Assistance for Senior Citizens – If you’re at least 62 years of age and you live in your home you may qualify for some help. If you own your home outright or you have just a little left to pay on your loan, then an FHA Reverse Mortgage could work for you. With this type of loan, senior citizens can exchange the equity in their homes for cash. Only certain lenders approved for this specific loan type offer FHA reverse mortgages offer this type of loan.

5. Making Energy Efficient Upgrades – Borrowers who want to make their homes more “green” can use the FHA’s Energy-Efficient Mortgage program to do it. The costs and purposes must be within FHA guidelines.

6. Buying Manufactured and Factory Homes – The program has two kinds of loans that can finance these types of homes. The first is for buyers who purchase the land with a manufactured or factory home. The second is for borrowers looking to buy the home in a mobile home park. Be aware that not all lenders offer funding for these types of homes.

FHA will not insure a home loan used to finance the following:

  • Commercial enterprises
  • Boarding houses
  • Hotels, motels or inns
  • Tourist quarters
  • Private clubs
  • Bed and breakfasts
  • Fraternity or sorority houses

To see if the home you’re eyeing is FHA-eligible, talk to one of our loan specialists at 1-866-663-0826.

What Are FHA Minimum Standards for Code Durability?

Now that we’ve reviewed some of the kinds of properties that can be financed with FHA-insured loans, let’s talk about standards. Before choosing a home, make sure it meets FHA’s Minimum Property Standards (MPS) first, or at least be clear they can be achieved before closing. These have been established to help protect homeowners so FHA carries less risk. MPS are intended to accompany an area’s building codes.

Existing homes and new construction financed with FHA mortgages serve as collateral. That’s why it’s important for the structures to be durably sound. This can reduce the FHA’s liability should the borrower default.

Specifically, FHA MPS have requirements for doors, windows, paint, wall coverings, kitchen cabinets, carpet, gutters and rain spouts, among others. These are all things that if left to deteriorate can have a negative effect on home value.

We can help you understand FHA MPS. Call us at 1-866-663-0826.

Can I Buy A Home In An Area That Has No Building Codes?

Properties financed with a loan insured by FHA must meet U.S. building codes or state or local building codes that are nationally recognized. Some areas have no building codes. In this case, the HUD Field Office assigned to that area would specify an appropriate nationally recognized code.

Call us for more about FHA Mortgage Eligibility, or fill out our quick online form and we’ll call you.

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