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How‌ ‌to‌ ‌Apply‌ ‌for‌ ‌an‌ ‌FHA‌ ‌Loan‌ ‌


The Spire

What is an FHA Loan?

FHA mortgage home loans are insured by the Federal Housing Administration, an agency within the Department of Housing and Urban Development (HUD). As FHA loans are backed by a government agency, lenders assume less risk themselves and therefore have more flexibility to fit the needs of borrowers, including first-time homebuyers and those seeking an alternative to conventional financing.


Requirements for FHA Loans

FHA loans are attractive to prospective homebuyers for many reasons, mainly due to looser qualifying requirements. Here’s what you need to know about qualifying for an FHA loan. 

  • Credit score and history – You must have a minimum credit score of 580 and typically no more than one 30-day late payment within the past 12 months. 
  • Down payment – There is a minimum down payment of 3.5% if your credit score is 580 or higher. Borrowers may qualify for a Down Payment Assistance program to offset a portion or the entire amount of this cost.
  • Loan-to-value ratio (LTV) –  LTV compares a loan amount to the home’s market value. An FHA loan may be used to finance up to 96.5% of the purchase price.
  • Closing costs –  FHA loans have lower closing costs than conventional mortgages. Expect to pay between 2% and 5% of the loan amount. 
  • Debt-to-income ratio (DTI) – DTI is the percentage of gross monthly income that goes toward monthly debt payments. For an FHA loan, a DTI ratio can typically be higher than that of a similar conventional loan.
  • Primary residences only – Investment properties and second homes do not qualify for FHA loans. You must also occupy the property within 60 days of closing.


How to Prepare for an FHA Loan

 Here are some things you can do before applying for an FHA loan.

  • Organize Documentation. Examples of records you will need to provide include:

Tax returns and W-2s from the past two years 

Bank statements 

Recent pay stubs and proof of other income

Names and addresses of employers over the previous two years

Two years of profit and loss statement (for self-employed borrowers)

Pension, Social Security, or disability income, if applicable

  • Review Finances. Though an FHA loan payment may have lighter financial requirements than other types of loans, strong financial standing generally increases your chances of securing an optimal loan rate and term. Taking action to increase credit score and reduce debt prior to applying will help to set a successful path toward loan approval.


Apply Now!

If you are looking to take advantage of the several benefits that FHA loans have to offer, our local FHA mortgage lenders will make it easy to get started with your loan application. We will guide you through the process to get you the mortgage you need for your home purchase. Chat with us today to see if an FHA loan is right for you. 

A Lending Hand for Financing Home Mortgages

Spire Financial (A Division of V.I.P. Mortgage, Inc.) brings lending expertise to you. All of our loan officers offer personalized communication for every client, guiding them through the process. We can show you ways to maximize your finances and unlock future opportunities. Spire Financial keeps you in control of refinancing, debt consolidation, and home equity. Together, we can achieve your financial goals.