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Who Qualifies For FHA Loans?


The Spire

A Federal Housing Loan (FHA) is a government-backed mortgage that helps individuals finance a home easily compared to other loans. It’s given to those with a low credit score or debts. This loan is also available to those who have become bankrupt or have other financial issues.



Well, most loans require mortgage insurance when the borrower pays for less than 20 percent. With FHA, you’ll pay two insurance premiums;  

  •     Upfront mortgage insurance- it is 1.75% of the total amount. This is payable once the loan is taken out, which means the money from the financed loan is available to use.
  •     Annual mortgage insurance- it costs 0-45-1.05% depending on the initial to value ratio and payment term.

Note that these premiums are usually canceled after so many years if the borrower has financed 90% or less of the total value of the property.


Have a Credit Score of 580-640 

The minimum credit score for qualifying for a FHA loan is 580. However, note that FHA is just the insurer, which means that the lender sets the credit score. Often, it is 640 for a FHA loan.


Have a Down Payment of at least 3.5% 

In order to qualify for a FHA loan it is required to make a down payment of at least 3.5%. Therefore, one must save for at least 6% of the home’s purchase price closing. Note that this amount includes the upfront premium insurance, which accounts for 1.75%. However, you can undergo a FHA-approved credit counseling program before closing to reduce the amount by 1.25% Use a FHA loan down payment calculator to know the details.


Have a Steady Income 

In order to verify income, tax returns or pay stubs are used when applying for a FHA loan. FHA lenders, although they accept a short work history, usually want to prove that you’ve worked in the same industry for at least two years.


Affording Both Housing Payment and Existing Debt is Possible

Like all loans, FHA lenders need to be sure that you can afford to pay. FHA loans won’t allow payments more than 35% of the individual’s income to a mortgage payment, i.e., before taxes. Also, the mortgage payments and other monthly debts shouldn’t take more than 48% of the individual’s income.


Other requirements include; 

  •     Have an established credit history
  •     Purchase a home that is within the FHA loan limits
  •     The house should be the primary residence 

Since FHA loans are offered by different lenders, some requirements, costs, and rates of the same loan may vary.

These loans are found through various sources, including banks, independent mortgage lenders, credit unions, etc. Therefore, if someone is looking for FHA loans near me, one is easily found. However, make sure to compare different lenders before picking one.

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.