While we’ve already talked about myths and misinformation regarding mortgage loans, we thought it would be useful to delve deeper into this topic. Taking out a loan can be quite intimidating, especially if you have no prior experience and knowledge about this process.
To help make things easier for you, we thought it would be useful to put together a brief article answering common questions about Federal Housing Administration (FHA) loans. Hopefully, this article proves to be useful when it comes to aiding you to secure a government home loan for your housing purchases.
What is the Maximum Amount of an FHA Loan?
The maximum FHA loan amount varies wildly by county. For the most part, the maximum loan for Florida counties is set at $356,362. If you want to get the exact amount so you can plan around things better, it would be wise to look into the FHA mortgage limits.
What is the Minimum Down Payment for FHA Loans?
Another thing that people seem to have problems with is figuring out the minimum down payment for FHA loans. While you may opt to pay more, the borrower’s minimum required investment is 3.5% of the property’s purchase price or the adjusted value of the property. Another important thing to note is that the funds must come from the borrower. One exception to this is if the funds are a gift from an individual who is acknowledged as an acceptable donor. Acceptable donors, in this case, refer to family members (excluding cousins, nieces, and nephews). The FHA also acknowledges employers, labor unions, and charitable organizations as acceptable donors.
What Are the FHA Guidelines Regarding Employment and Income?
Aside from putting down a downpayment, the FHA also requires two-year employment and income history for both employees and self-employed borrowers. This isn’t out of the ordinary as they will need assurance that you will be able to pay off your loans. You’ll need to be able to supply the FHA with pay stubs, tax returns, and W2s in order to prove that you are capable of paying off your mortgage.
What Is the Minimum Credit Score Required for FHA Loans?
You’ll be glad to know that the credit score requirements are pretty accessible when it comes to FHA loans. The minimum credit score required is set at around 640 but loans can be approved down to a 580 credit score. However, if the borrower’s score is 579 or lower, they can be approved with a down payment of 10% or greater.
Brady Webb of American Mortgage Solutions quoted“If you still don’t qualify due to your credit score, the FHA will still evaluate your overall credit history so it might still be worth applying regardless of your current credit score.”
Home Buying with American Mortgage Solutions
As you can see, securing an FHA loan isn’t that difficult as long as you know all the criteria. Be sure to keep all the information that we’ve laid out here in mind the next time you are in the process of applying for a mortgage loan. Also, an important thing to keep in mind is FHA loans have lower interest rates than conventional loans. If you have more specific questions about this subject, we recommend that you speak with a mortgage professional.
In need of mortgage loan solutions? Contact our Florida office at (239) 766-8344. We also have offices in Louisville, Kentucky. If you would like to reach us there, you can give us a call at (502) 327-9770. We are proudly licensed in and serve Florida, Indiana, Kentucky, and Tennessee.