FHA Loan Requirements
Constant change in legislation makes it difficult for borrowers to keep track of the current requirements for FHA home loans. These changes are a result of attempts to change laws to close loopholes and make it more difficult for people to take advantage of and game the system. These changes in legislation also usually help make the loan process more fair and help people have an equal chance to receive lending.
People who are applying for an FHA loan are required to be subject to a credit check, employment and income history, and their spouses are required to submit the same information as well. Minimum credit qualifications are different depending on the kind of loan desired. Typical new home purchase loans require a minimum credit score of 580 or higher. The FHA states that applications with credit scores of 500-579 are "limited to 90% LTV." Applicants with a credit score of less than 500 are not eligible for any kind of FHA home loan.
If you have poor credit and don't think you can qualify for a loan, there are certain things that you are able to do to improve your score and get a loan. Improving your credit score takes time and discipline, but it is possible. First, work with a credit advisor who can analyze your credit report and help you recognize areas where you can make improvements. The easiest and fastest way to increase your credit score is to minimize that debt-to-income ratio. They will give you suggestions on your expenses and bills and help you find areas where you can save money and pay off your debts faster. Once you start to catch up on your delinquent payments, your credit score will begin to improve and possibly get you to the point where you could potentially qualify for a loan.
If you are serious about applying for a home loan, the FHA offers credit counseling that can help you change your lifestyle and improve your credit. Another great place to find help is with first time homebuyer counseling. Both of these resources will work with you to help you find ways to manage your finances and eventually qualify for an FHA loan.
Determine what kind of loan you are looking for and speak with a licensed lender today to see if you qualify for an FHA home loan.