FHA Loan

Federal Housing Administration is a government agency created in 1934 as part of The National Housing Act.  It provides mortgage insurance and insures loans made by approved lenders.  Typically they are for individuals that cannot afford a large down payment although there are conventional options for this as well.   Listed are a few of the things to make note of when applying for this loan.

  • Credit score of 620 required.  When checking your own credit on websites like Credit Karma understand that these can be off as much as 40 points.  If your credit score isn’t where it needs to be.  A good lender can help you get the score back to where it needs to be to qualify.
  • A 3.5% down payment .
  • Gifts of money are permitted.  Make note all funds being counted must be trackable for the last 60 days.
  • Earnest money used when making an offer must be trackable or it will be disallowed.  If you have “mattress” money you will need to deposit it into your account 60 days prior to applying for the loan.
  • Your mortgage payment cannot be more than 30% of your gross income.
  • Debt from a non-purchasing spouse WILL be included.
  • A 2 year work history or proven college work.
  • Mortgage insurance required for the life of the loan.  Mortgage Insurance rate will never go down.  This cost is like adding 1.25 % to the rate.  Loan limit is $275,000 in Ada and Canyon County.

An FHA loan is an option that should be used as a last resort due to the cost of mortgage insurance.