Helpful Guide For Applying An FHA Loan In Texas Pt 2

All You Need To Know About A Texas FHA Loan

Part 2

FHA Loan Limits

Regardless of the FHA loan type you’re looking for; there will always be a limit on the mortgage. These limits are contingent on the county. FHA loan limits as of 2020 range between $331,760 to $765,600.

How To Qualify For FHA Loan

To be eligible for an FHA loan, you will have to satisfy certain requirements. It’s essential to not these are the minimum requirements for FHA, and lenders may opt to have more stipulations included. To ensure that you receive the best FHA loan terms and mortgage rate, look around for various FHA-approved lenders and compare their respective offers.

Credit Score

The minimum credit score you should have to receive an FHA loan is 500. You still qualify for an FHA loan if your credit score ranges between 500 and 579, but you’ll be required to make a significant down payment. Note that these are FHA rules – lenders can decide to go for a higher minimum credit score.

Down Payment Funds

If you have a credit score of over 580, your loan down payment can to as low as 3.5%. A credit score between 500 and 579 means 10% of the buying price will be dropped.

The upside is that the money doesn’t need to come from your personal savings. Gift money can be used to pay for your down payment so long as the donor writes a letter describing what sort of relationship they have with you, their contact information, gift amount, and a statement saying no repayment is needed.

Debt-To-Income Ratio (DTI)

The FHA needs a DTI that’s less than 50, which means that your monthly debt payments can’t exceed 50% of your gross income. This encapsulates debts you aren’t actively pursuing.

In the case of student loans that may be in deferment, your FHA loan will include 1% of the total loan as the monthly repayment amount. For any other loans you aren’t actively repaying, 5% of the total loan amount will compute your DTI.

Property Approval

The property you’re trying to purchase with an FHA loan, be it a condo, a house, a manufactured house, or a multifamily house, has to adhere to FHA minimum property requirements.

The FHA needs an appraisal that’s different from a house inspection. They want to be sure the house is a good investment – worth more than the initial amount you’re paying – and make sure that it has met livability standards and basic safety.

Mortgage Insurance

For every loan issued, FHA mortgage insurance is included. When you receive an FHA mortgage, you’ll be required to make an initial mortgage insurance payment (which can be included in the total loan amount), from where you’ll make monthly payments.

How To Apply For FHA Loan

Making an FHA loan application will need personal and financial documents that include:

  • A legal Social Security number.
  • Proof of citizenship, eligibility to work in America, or legal permanent residency
  • Bank statements for the last 30 days. You’ll also be required to offer documentation for any cash deposits done at that time (often pay stubs).

Advantages Of FHA Loans

  • Down payments for as low as 3.5%.
  • Debt-to income ratios that go as high as 50 are permitted
  • Lower minimum credit scores compared to conventional loans.

You can use any of the interactive features on our website or call us anytime to speak to a diligent mortgage professional directly. We hope to work with you soon! Click here to go to the first article in this series.

Helpful Guide For Applying An FHA Loan In Texas Pt 1

All You Need To Know About A Texas FHA Loan

Part 1

An FHA loan is basically a mortgage that’s been insured by the Federal Housing Administration. It allows down payments for as low as 3.5% with a 580 FICO. If you are a buyer with lower credit scores or limited savings, you should consider applying for FHA loans.

Regardless if you’re sure that an FHA loan is perfectly suited for you or you want to know what the FHA is, here’s a breakdown of all you need to know. You don’t need to delve into the FHA handbook for answers; find all the answers to FHA FAQs right here.

What Is An FHA Loan?

This is a mortgage that has been insured by the Federal Housing Administration. Borrowers with a credit score of 580 or more are eligible to get a minimum of 3.5% down payment. FHA loans are sought-after by first-time buyers with credit issues or little savings.

The FHA insures mortgages given by lenders such as credit unions, banks, and nonbanks. Upon default of the said loan, that insurance is in place to protect lenders. This is why FHA lenders are more than eager to provide favorable terms to borrowers who may be eligible for a home loan.

What Is The FHA?

The FHA, or as popularly referred to, The Federal Housing Administration, has been part and parcel of the U.S. Department of Housing and Urban Development since 1965. However, the FHA was founded over 30 years before that, as part of the New Deal.

In addition to the Dust Bowl drought and stock market crash, the Great Depression was marked by the housing market collapse. By the start of 1933, an estimated half of U.S. homeowners had defaulted their mortgages.

The FHA was founded under the National Housing Act of 1934 to cut foreclosures and make homeownership affordable. It put in place the 20% down payment as a new practice, insuring mortgages for up to 80% of a house’s value – in the past, homeowners were limited to borrow up to 50-60%.

What Are The Differences Between A Conventional Loan & FHA Loan?

  • Compared to Conventional Loans, FHA loans permit lower credit scores and, in some circumstances, low monthly mortgage insurance payments.
  • FHA loans may have closing costs not required by conventional loans
  • FHA regulations are more open-minded when it comes to gifts of down payment cash from employers, family, or charitable organizations.

Various Types Of FHA Loans?

The FHA provides various loan options, from relatively standard purchase loans to products specially made to meet highly specific needs. Here’s a look at FHA loans used to purchase a house:

Common FHA Purchase Loans

Basic Home Mortgage Loan 203(b)

  • Fixed not adjustable rates.
  • Various types of houses are eligible.

203(k) Rehab Mortgage

  • Renovation and Finances purchase with a single loan.
  • Buy and refi choices are available.

Construction to Permanent (CP) Loan

  • Finances the construction of a house together with the land on which it will be built.

Title I Properly Improvement Loan

  • Used for repairing an existing house or buy a manufactured home.

Energy-Efficient Mortgage(EEM)

  • Funds energy-efficient upgrades during a refinance or home purchase.
  • Available for existing or new homes.

You can use any of the interactive features on our website or call us anytime to speak to a diligent mortgage professional directly. We hope to work with you soon! Click here to go to the second article in this series.

Mortgages In Texas: Which Ones Are Easy To Qualify?

The Easiest Texas Mortgage To Qualify For

Have you been looking for the best mortgage companies in Texas, but you don’t know which ones are easy to qualify for? Don’t fret. This article will provide you with some of the options that will increase your chances of getting a mortgage. One thing you have to understand is that getting approved for a mortgage is not easy. The procedures are complicated and extensive. The lenders do a thorough evaluation, and thus, any wrong move or failure on your side automatically disqualifies you. 

For you to qualify for a mortgage, you will have to go through a lot of investigations. The lenders have to ensure that the person they give the loan to will be able to repay the loan as agreed. Failure to repay the loan puts the lenders at risk because they are the ones left with the bad debts. Besides, mortgage loans are expensive. 

How do I get a mortgage on my house? The bank is willing to give you several dollars for you to build your dream home. You don’t expect them to be lenient when choosing who qualifies for the mortgage loans and who doesn’t. Since the mortgage process is tough, it is useful to known which mortgage loan is easy to qualify for, to avoid all the hustle. Read on to get more information.

Government-Backed Mortgages

Some of the most accessible loans to qualify for are the government-backed mortgages. They are usually issued by private lenders, but they are guaranteed or insured by the government. By these loans being guaranteed by the government, it means that in case you fail to repay the loan, the government takes responsibility. 

The reason government agencies ensure some mortgages is that they want to help potential homeowners get approved for the mortgages. This makes it easier for the lender to approve the mortgage because they are sure that even if you fail to repay the loan, they won’t have to incur the losses. An example of government mortgages that are considered easy to qualify is the FHA loans.

FHA Loans

If you ask around for the mortgage that is easy to qualify, most people will recommend FHA loans. The federal department of Housing and Urban Development usually manages a mortgage insurance program that is operated by the Federal Housing Administration. 

These loans are easy to qualify for because first, they require a down payment of as low as 3.5%. This is lower than the conventional non-federal backed mortgages, which usually ask for a down payment of at least 5%. Secondly, these loans have a reasonable average credit score allowing most homeowners in need of the mortgage to qualify. 

How can I get approved for a mortgage with bad credit? In most cases, these loans don’t even require a minimum credit score amount, meaning that it is up to the individual lenders to determine the agreeable credit score before approving the mortgage loans. With these loans, you don’t have to worry much if you don’t have exceptionally high credit scores, because your score may qualify you when it comes to Federal Housing Administration loans.

FHA Insurance

Note that because the FHA insures the borrowers, the interest rate on FHA is considered more competitive as compared to the prime interest rate conventional mortgages. Note that one of the downsides of the FHA loans is that the FHA mortgage insurance can be more costly when compared to a conventional mortgage. This mortgage insurance is, however, important because it protects the lender by ensuring they get full recovery of their funds in case the borrower defaults. This is a bit different from the veteran affairs guarantees loan, which doesn’t usually require one to pay for mortgage insurance.

It is okay to look for easy mortgage options that you can qualify for. This helps because there is a lot of competition by homebuyers to get a mortgage. Instead of straining, why not look for a cheaper option and prepare the conventional loan requirements.

Before making a decision, let one of the experts at Mortgage Lending Texas help you find out exactly what loan is best for you.  Contact us today Or Call Us @ (866) 717-9695