How to Qualify for FHA Loan

A Federal Housing Administration (FHA) loan makes housing more affordable for people seeking one-family and multi-family residences. The FHA offers mortgage insurance for loans created by FHA-approved lenders. It insures loans on one-family or multi-family homes. The FHA is one of the largest insurers of residential mortgages worldwide. Since 1934, the agency has insured over 10 million properties. As with other loans, however, you must meet certain qualifying criteria to receive an FHA loan Las Vegas. We have compiled information to help you determine whether or not you meet the qualification criteria for an FHA loan. 

fha loans las vegas

How Much FHA Loan Do I Qualify For

Basic FHA Requirements 

 In general, a credit score of 620 is considered to be the low end for securing a conventional mortgage. However, an FHA loan applicant must have a FICO score of just 580 to qualify for an FHA loan. With this score, you can also qualify for a low down payment of only 3.5%. If your credit score is less than 580, you will need to make a minimal down payment of 10%. However, a 10% down payment is still about half of the usual down payment required for individuals purchasing a home. If you are considering applying for an FHA loan, it certainly helps to have a better credit score. Be aware that FHA credit requirements also account for more than your FICO score. They also determine your eligibility based on a personal history of bankruptcy, payment, foreclosure, and any extenuating circumstances that might prevent you from making a payment on time. 

Credit Scores

 Credit scores are maintained by three separate agencies in the United States. This includes TransUnion, Experian, and Equifax. Several lenders, including credit card companies, banks, and creditors, use credit reports from these agencies to determine the level of risk associated with lending to consumers. You can normally request a free credit report from these three agencies. 

Possible Problem Areas 

 Sometimes, people encounter problems that might prevent them from getting an FHA loan. They cover many categories, including: 

  • Bankruptcy
  • No credit history 
  • Late payments
  • Foreclosure
  • Collections, federal debt, and judgments

 Bankruptcy does not necessarily disqualify an individual from receiving an FHA mortgage. For a Chapter 7 bankruptcy, the borrower must have either re-established a favorable credit score or no additional credit obligations. If you have a history of late payments, it is best to submit an FHA loan application if you have at least one year’s worth of on-time payments for all of your financial responsibilities. A past foreclosure might not disqualify an individual from receiving an FHA home loan. However, this situation depends largely on extenuating circumstances. Finally, judgments, collections claims, and federal debt must typically be paid off before one can apply for an FHA loan Las Vegas. 

Competitive Interest Rates and Lenient Qualification Standards 

 Since your credit score doesn’t need to be as high to qualify for an FHA loan as it does for other types of loans, FHA loans are categorized as having less restrictive qualification standards. Most borrows can qualify for an FHA loan, even if they have a questionable credit history and comparatively lower credit scores. In comparison to traditional mortgages, FHA loans have relatively lower interest rates. This makes it easier for homeowners to afford to make their monthly payments. 

Down Payment and Insurance Qualifications 

 You might find that you have less money available for a down payment than is normally required for a loan (10% – 20%). In this case, you may be eligible for an FHA loan. FHA loans are as low as 3.5. If you don’t have the money available in your bank account to cover the down payment, you can use financial resources from other places such as family and friends. Whatever funding source you use, however, it must come from an FHA-approved source. While most loans require a borrower to obtain a Private Mortgage Insurance if they don’t have a minimum down payment of 20%, FHA loans have more relaxed requirements. To qualify for an FHA loan, you simply need to pay a yearly Mortgage Insurance Premium and an Up Front Mortgage Insurance Premium. (Read more on fixed rate home loans here.)

FHA Loan

If you have questions about FHA loans or need assistance with your FHA application, don’t hesitate to contact our office. As the best Las Vegas mortgage brokers, we will gladly help you out with all of your FHA loan application needs.