Did you know FHA mortgage programs make up approximately 20% of the market? On a brighter note, FHA loans are the easiest to close. The minimum credit score requirement is low, and borrowers can put down a low percentage of the loan value. For those with years of financial struggle can finally heave a sigh of relief. Whether you are expecting the lowest mortgage rate or lenient guidelines, the FHA loans have got every borrower’s back. Before you get excited about the loan program itself, develop a deep understanding of the loan requirement in Texas.
The approval process of an FHA loan is easier than conventional loans. The Federal Housing Administration has relaxed the guidelines in recent times, and it has an impact on borrowers. More people are interested in getting home loans. Further, the low mortgage rates have shaped the loan into an affordable option. Amidst all the good news, how is your preparation coming along? Whether you have eyes on a small down payment or flexible approval process, the FHA loan requirements Texas pay off. For obtaining the mortgage, a series of requirements are necessary. So, let’s take a look at the FHA loan requirements.
FHA Credit Score Requirements
The FHA loan has a low credit score requirement, and it is related to the down payment.
- 580 and above – Minimum 3.5% down payment available
- 500 and 597 – Minimum 10% down payment available
- Below 500 – Ineligible for FHA loans
The loan program is primarily designed for low-credit score borrowers. But the mortgage lenders add overlays to the scores. This indicates the fact that borrowers have a chance of missing out on the mortgage if they do not have at least 600. Remember, this act does not necessarily profit a lender. Moreover, the lender might be penalized if they take drastic measures to make the requirements more stringent.
FHA Property Requirements
Employment, credit score, and debt-to-income – these are personal requirements. The lenders put an extra focus to see whether you are financially stable. On the other side, the property requirements play an important role in defining your qualifications. Following are the factors which are important as per the HUD,
A house that already screams unlivable cannot be on your list. If it is hazardous and unsafe for residential purposes, you will not get the loan.
FHA Loan Limits
Along with the FHA loan eligibility requirement, you should know about loan limits. Depending on the property type and neighborhood, the loans are under a particular amount. Therefore, a maximum loan amount is always present, and it considers the median home price. For example, in a high-end property value area, the maximum loan amount is $636,150 for a single-family unit.
Lenders may offer FHA loans, but their requirements slightly vary every time. It is better to figure out the mortgage insurance premium. So, find an FHA-approved lender and see how you can benefit from the loan program. Be ready with documents!