All You Need To Know About A Texas FHA Loan
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.
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.
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.
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.