How to Qualify For an FHA Loan
Are you thinking about buying a new home, or perhaps a home or condo for there very first time? If so, securing financing is a big first step in reaching the ultimate goal of homeownership, and exploring all your options is always the best direction to take. For many home buyers, FHA loans provide everything you could want in a mortgage product while also making home ownership obtainable despite income or credit history challenges you may have. But what exactly are the steps you need to take in order to qualify for an FHA loan? Let’s take a look below.
Quick 3-Step Process of Qualifying for an FHA Loan
- Before applying for any loan, check your credit history to make sure everything looks accurate, and so you know your credit score. FHA loans generally require a minimum credit score of 580.
- Paying down as much debt as possible before applying is always recommended, mainly because lenders will look directly at your debt-to-income-ratio before determining whether you can afford a mortgage payment. Once your DTI is 43 percent or lower, you’ll be eligible to qualify for an FHA loan.
- Once your credit score is sufficient, it’s time to start thinking about the down payment. Fortunately, FHA loans only require a low down payment of 3.5 percent, so once you’re able to reach whatever benchmark you have set, you’re ready to begin searching homes that fit your budget.