If you are buying a house for the first time, it’s important to know how to apply for an FHA loan.
Federal Housing Loans (FHA Loans) are available for buyers who have low credit scores and minimal savings for a down payment. First-time buyers who don’t qualify for a conventional loan may be able to get a FHA loan to purchase their home.
Closing costs on FHA loans are often cheaper. FHA mortgage loans can be a life-saver for buyers who aren’t financially strong enough to secure a conventional loan.
How Big Can An FHA Loan Be?
You can apply for a FHA loan to purchase a home that costs less than 115% of the median home price in your county.
For example, the median home price in Houston for 2020 is $285,000. To purchase a home in Houston with an FHA loan, the maximum limit for a single unit is $331,760.
Are you home shopping in San Antonio, Dallas, Fort Worth, Austin, or elsewhere in Texas? Check the FHA loan limits in your area.
To apply for an FHA loan, you will need a lender who issues FHA loans in Texas and you must meet the FHA Loan requirements.
What You Need to Qualify for a FHA Loan
Getting an FHA loan is easier than getting a conventional loan, but you need still a few things to qualify.
Verifiable Income
First, to qualify for an FHA loan, you’ll need a verifiable income.
You will have to provide your lender with pay stubs and tax returns. These documents prove that you have enough income and financial stability to make your mortgage payments.
Your mortgage payment can not exceed 35% of your take-home pay. If you have other debt, your debt-to-income ratio can not exceed 48% including FHA loan you are applying for.
Down Payment
The biggest draw of FHA loans is that they only require buyers to put down 3.5%.
Conventional loan down payment requirements are a barrier to can be a barrier to homeownership for some people. FHA loans make owning a home more attainable for those who can’t save enough for a traditional down payment.
It’s best to save 6% as a down payment to account for closing costs.
Credit Score
Next, to qualify for an FHA loan you’ll need a credit score of at least 580 and two open lines of credit.
If you can, it’s best to eliminate all debt before applying for the mortgage loan.
Once you have good credit and a down payment ready, you can meet with a lender to get pre-approved for the loan.
Required Documentation
Finally, when you meet with your lender you will need to bring certain documentation.
Make sure to bring your driver’s license, social security number, tax returns, asset account statements, and bank statements.
Pre-Approved for an FHA Loan? Time To Start Shopping
Once you’ve been pre-approved for an FHA loan, you can start shopping for your house.
After you’ve found your dream home, you can your lender can help you complete the loan application for your FHA mortgage.
Be aware that you’ll have to purchase private mortgage insurance if your down payment is less than 20%.
