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Texas FHA Loan

FHA loans provide great incentives for future Houston homeowners. Learn about the Texas FHA loan and how you can qualify.

If you are looking for a home in Texas, you may be able to qualify for a Texas FH loan. Since 1934, the FHA has made it possible for low and mid-level income families to become homeowners. 

Houston FHA loan mortgages are insured by the Federal Housing Administration and are a popular choice for first-time homebuyers with less than ideal credit and savings. 

FHA-approved lenders are authorized to issue Texas FH loans for the purpose of buying, refinancing, or remodeling a home. 

Here’s what you need to know about applying and qualifying for a Houston FHA loan. 

What is the Federal Housing Administration (FHA)?

The FHA was established in 1934 to reduce foreclosures and make homeownership attainable – helping more Americans become homeowners 

Prompted by the housing market collapse in the Great Depression, the Federal Housing Administration’s creation was included in the National Housing Act. 

The twenty percent down payment rule was established, and it allowed low-income individuals to purchase homes.

FHA loans are backed by the federal government.

Your Guide to Texas FHA Loans

If you need a Texas mortgage, but don’t have the savings and credit needed to qualify for a traditional home loan, you may be able to get an FHA loan. 

While traditional loans are issued directly to borrowers, these loans are insured and protected by the FHA, allowing buyers with low credit scores and little savings to secure financing to buy a house.

Low-income individuals looking to take on a Texas mortgage can use this loan option to purchase a home. A Texas FH loan offers a few defining features. 

Easy Qualification

The main perk of FHA loans is that they are easy to qualify for. All that’s required to qualify for this loan is a credit score of at least 580 and a 3.5% down payment.

You can qualify for an FHA loan with a minimum credit score of 500, but if you can get your credit score to at least 580, you won’t have to pay a higher down payment. 

Coming up with a twenty percent down payment may be unrealistic for low-income families. The FHA loan puts homeownership within reach of individuals who wouldn’t qualify for a traditional Texas mortgage. 

Lenient Down Payment Rules

Down payment regulations for FHA loans are more flexible than traditional loan regulations, making it easier for homebuyers to meet or exceed the minimum down payment requirement. 

While you aren’t permitted to use gift money towards your down payment on a traditional loan, the Federal Housing Agency allows you to use gift money to cover your entire down payment should you choose to do so. 

Versatility

FHA 203(K) loans are a subcategory of FHA loans. FHA 203(K) loans are a single loan which can be used for the purchase of the home and certain structural and cosmetic renovations to the home. 

If you need to update your home at the time of purchase this is a loan option for you to consider. 

Plenty of Lenders to Choose From

The FHA works with mortgage lenders, credit unions, and other loan institutions to provide accessible home loans to buyers. You can apply for an FHA loan through any FHA-approved lender, so you have some flexibility when choosing your lender. 

If you aren’t approved by one institution, you can apply at a different one. Keep applying until you get approved, and don’t be afraid to shop around for low rates. The FHA marketplace is competitive, so you can negotiate lower fees on your loan.

What You Need to Know About FHA Loans

Before you apply for an FHA loan, there are a few things you need to know about Texas FHA loan limits and FHA loan requirements 2020. 

It’s important to understand these limits and requirements before you apply so you have the best chance of being approved for the mortgage. 

Texas FHA Loan Limits

Loan limits for FHA loans range from $331,760 to $765,600. 

FHA Loan amounts are based on the home prices in your area. The value of the property you want to buy with an FHA loan must be less than 115% of the median home price in the county where it is located.

To qualify for any loan amount in this range, the home will have to be appraised by the FHA to ensure the property is worth the amount you are borrowing. 

FHA Loan Requirements 2020

To qualify for an FHA loan, you’ll need to meet the following requirements. 

  • Stable employment and income
  • The home will be your primary residence
  • No foreclosures in the last three years
  • 50% or lower debt-to-income ratio
  • 3.5-10% down payment depending on your credit score

You will be required to pay Mortgage Premium Insurance (PMI)on an FHA loan if you put less than 20% down

While the minimum requirements for FHA loans are easier to meet than those of traditional loans, you will need to gather the necessary documentation prior to meeting with your lender. 

In most cases, preparedness on your end equals cooperation from your lender.