Benefits

• There are a number of reasons home buyers apply for FHA-backed home loans. You can get into a home for as little as 3.5 percent down. If you were to put less than 20 percent down on a conventional loan you would have to pay private mortgage insurance (PMI) each month, but because the federal government is insuring your FHA loan you'll save that monthly PMI payment. Another benefit of having the backing of the federal government is that you may be able to secure a loan with a credit score as low as 580. In addition, home owners find that it is easier to refinance an FHA loan than a conventional loan should the need ever arise.
  
  

Loan Limits

• There are 114 counties in the state of Missouri. Because home costs vary by county, FHA loan limits also vary. The loan limits are set separately for single-family homes, duplexes, tri-plexes and four-plexes. The loan limits are periodically reviewed and adjusted. The U.S. Department of Housing and Urban Development website keeps up-to-date information regarding limits.
  
  

Debt Ratio

• Part of the determination as to whether you qualify for an FHA loan in Missouri is based upon your debt-to-income ratio. In figuring this number an underwriter makes a list of your total income. They then make a list of your monthly expenses, including the total mortgage payment with principal, interest, escrow, hazard insurance and homeowner's dues. To this number they add your other payments such as student loans, auto loans, credit cards and personal loans. The underwriter will then divide your total monthly debts into your total monthly income. FHA wants to see a 43 percent or less debt-to-income ratio.
  
  

Income

• FHA requires that you have a minimum of two years of steady employment, preferably with the same employer. They will want to see your W-2s for the past two years and if you're counting on bonuses as qualifying income, they'll also want to see your agreement with your employer regarding bonuses. College or continuing education is sometimes considered in lieu of work history.
  
  

Defaults

• FHA will want to know why you are in default of any previous obligations and to be assured that you have dealt with prior debt. Child support, student loans, federal and state tax liens and existing judgments must be paid in full or you must have a prior payment agreement in place and have at least a 12 month history of repayment. It should be a minimum of 24 months since a prior bankruptcy was discharged and you should have good credit reflected on your credit report since the date of discharge. It should be at least 36 months since a prior foreclosure.