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Riverside & Corona Real Estate
Are You Eligible for an FHA Loan?
FHA Loan Eligibility
You may be a good candidate for an FHA loan.
An FHA loan is a federally insured loan made by the Federal Housing Administration, which has been insuring mortgages since 1934. FHA loans are very good options for specific borrowers.
FHA loan overview
An FHA loan is a mortgage insured by the Federal Housing Administration. It has several key components.
- Low down payment. FHA loans usually require a minimum of 3.5 percent down payment. This down payment can also be gifted to the borrower, which makes home ownership more obtainable for the first-time home buyer.
- Easier qualifying. Those with less-than-perfect credit are more easily approved for a loan through FHA programs because the federal government insures them.
- Lower overall costs. An FHA loan can have a better interest rate, which cuts down on the overall cost of the loan.
- Avoiding foreclosure. The Federal Housing Administration provides programs to help avoid foreclosure in case of financial difficulties.
- FHA allows sellers to contribute to the buyer's closings costs - up to 3% of the purchase price - which is especially helpful for first-time buyers.
- FHA limits for Riverside and San Bernardino Counties - $500,000 loan limit.
Eligibility requirements
- You must have a valid Social Security Number, be a legal resident of the United States and be of legal age to obtain a mortgage in your state.
- The lender verifies whether you can qualify for the mortgage by checking income, assets, debt load and credit history.
- You must be able to qualify for the loan.
- Typically, the only income limitation is to have enough income to afford the mortgage in addition to other debt payments.
- Although there is not a minimum credit score required to qualify, your score is still examined to help determine the interest rate.
Good candidates
Certain borrowers are better suited for an FHA loan than others.
- If you are a first-time home buyer, an FHA loan is a good option. It can help you get a better rate than a conventional mortgage and you do not have to have as large of a down payment.
- Those who can only afford a small down payment or those who were given the down payment as a gift often find an FHA loan to be a good choice. It only requires 3.5 percent down and the down payment can be a gift from a family member or other source.
- If you have less-than-perfect credit, an FHA loan might be your best option. Because the Federal Housing Administration insures the loan, lenders can provide a loan to a borrower with poor credit without needing to charge exorbitant interest rates.
If you meet the eligibility requirements and seem to be a good candidate for an FHA loan, you can contact an FHA-approved lender to see if you can qualify for a mortgage. However, it is always important to compare when shopping for a mortgage. Investigate conventional products, too, to see where you can get the best deal.
Additional information: Tips for getting your loan approved
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Pedersen Real Estate
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