How to Qualify for FHA Financing
- 1). Order a credit report to verify your score. The minimum credit score for new borrowers on an FHA loan is 580. According to HUD.gov, “New borrowers will now be required to have a minimum credit score of 580 to qualify for maximum financing. Borrowers with less than a 580 credit score will be limited to a 90 percent loan-to-value ratio.” This change has been in effect since March 2010.
- 2). Apply for a home loan, following a blemish such as declaration of bankruptcy, after a two-year waiting period. According to Mortgageplace.com, “The FHA only requires a two-year waiting period after a bankruptcy. Just half of the four-year waiting period for a conventional loan. FHA required a three-year waiting period after a foreclosure compared to the four-year waiting period for a conventional loan."
- 3). Consider accepting a down payment from a family member or employer, such as from borrowing from your 401(k). The required minimum down payment for FHA financing is 3.5 percent of the home's purchase price. According to FHA-101.com, “FHA mortgages have a low 3.5 percent down payment and the money can come from a family member, employer or charitable organization as a gift. Other loan programs don't allow this.”
- 4). Choose an approved home to qualify for FHA financing. Some homes that meet the criteria are single family homes, townhouses, condominiums or manufactured homes. According to FHAhomeloans.com, “Manufactured homes are generally acceptable collateral for an FHA loan. The property, however, must conform to HUD’s manufactured home guidelines. In order to be accepted, the property must meet the following minimal criteria. Property must be at least a doublewide property (no singlewides); The FHA loan must cover both the home and the land (no trailer parks); It must be on a permanent foundation and have the foundation certified by a licensed engineer; It must be built after June 15th, 1976; It must have a visible certification label (HUD tag) attached to each transportable unit of the home. Without that visible tag, a label verification letter is normally required before the loan can be approved."
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