Who Can Apply for an FHA Mortgage?
FHA loan rules say FICO scores below 500 cannot qualify for an FHA mortgage or refinance loan.
Another restriction--you must have legal status to be in the United States. That does NOT mean you must be a citizen of the United States to qualify for an FHA loan to buy or refinance a home.
That said, all applicants are required to provide documentation that shows the borrower’s status as a resident, non-resident alien (that is the official term used in FHA literature at press time) refugee, or asylum seeker.
Some borrowers discover another kind of restriction on FHA mortgages--some seek mortgage loans for things that cannot be purchased with them. For example, an FHA loan won’t be approved for any non-real estate purchases.
What does that mean? We’re talking about items such as houseboats or even recreational vehicles or RVs. The participating FHA lender cannot even consider an FHA single-family home loan for non-real estate purchases.
What that basically means is that if your purchase cannot be taxed or classified as real estate or “real property” it cannot be considered for a mortgage loan under the FHA Single-Family Home Loan program.
Who is a good choice for an FHA mortgage?
- Those buying a home for the first time.
- House hunters who have owned a primary residence previously.
- Those who want an affordable primary residence to live in as the home address.
- Borrowers who want a loan to buy a condo unit, duplex, or multi-unit properties up to four units large.
- Borrowers with established, stable employment likely to continue into the first few years of home ownership.
- Applicants who have FICO scores that meet the lender’s requirement ranges and the FHA’s requirement ranges. Those FHA loan ranges are 580 and above for maximum financing, 500-579 for 10% down. Additional lender standards may also apply.
- Borrowers who can repay the mortgage reliably over time who qualify with their income, low debt-to-income ratios, and a reliable history of repayment on financial obligations in the last 12 months plus.
- Applicants who have not been approved for major loans or applied for another big line of credit in the last 12 months.
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