FHA Purchase

FHA Loans – Everything You Need To Know 

FHA Purchase Loans:

• Low interest rates
• Gift for down payment
• No credit score allowed
• 500 minimum credit score
• Non occupying co-borrower
• Seller paid closing cost up to 6%
• 3.5% down with 580 credit score

First of all, FHA loans have been helping people become homeowners since 1934. Therefore, a perfect credit score is not needed for an FHA loan approval. In fact, even if you have had credit problems, such as a bankruptcy, it’s easier for you to get an FHA loan than a conventional loan.

As a result, FHA announced a set of policy changes to strengthen the FHA. The changes announced are the latest in a series of changes enacted in order to better position the FHA to manage its risk while continuing to support the nation’s housing market recovery.

Furthermore, FHA requires a minimum credit score of 500. There are no income limits like you may find with first time home buyer programs. However, there are limits on how much you can borrow.

Limitations

• 203(b) FHA purchase program provides mortgages for home buyers to purchase a principal residence with a low-down payment and with lower credit standards.
• 203(k) FHA purchase program is for the rehabilitation and repair of single-family properties. Providing both the financing to purchase a property and the financing to make repair. The program offers an important tool for expanding home ownership opportunities.
• HUD $100 down payment program for borrowers purchasing single-family HUD Real Estate Owned (REO). The program is limited to owner-occupant buyers who have not purchased a HUD REO property within the last 24 months.
• Lease with option to buy mortgage. Lease with option to buy allows a renter to buy the property they are renting. A lease option mortgage allows for seller’s credit.
• Gift of equity mortgage loan. A gift of equity is a transfer of ownership of a property to a family member or someone. Gift of equity down payment and gift funds requirements.

FHA Credit Requirements

Consequently, on January 20, 2010, FHA announced a new policy to address risk. As a result, FHA changed the minimum credit score for new borrowers.

• FHA requirements new borrowers will now be required to have a minimum credit score of 580 to qualify for 3.5% down payment
• Borrowers with less than a 580-credit score will be required to put down at least 10%
• As a result, the minimum credit score for an FHA loan is 500

Finally, this has allowed the FHA to better balance its risk and continue to provide financing for home buyers.