In a nutshell FHA offers federally insured mortgage programs that assist first time home buyers in getting into a home. The FHA program works my having the FHA Loan insured by the Federal Housing Administration which is a branch of the U.S. Government.  By allowing a guaranteed mortgage such as FHA, lenders are far more willing to lend since they have more of a chance of getting the money back if the mortgage goes into default.

Important Factors to Know

• You do not need to be a first time home buyer in order to qualify for FHA Loans.
• You do not need to be low-income in order to qualify for FHA Loans.
• You do not need to be a U.S. citizen to qualify for an FHA Loan.

Simple FHA Loan requirements to get into an FHA Loan

• Must have a valid Social Security Number (SSN)
• Must be a legal U.S. resident.
• Must be of age to sign legally binding documents.
• Does not require any credit history.
• Must not have had a Chapter 7 Bankruptcy within the last 2 years.
• If you have a Chapter 13 Bankruptcy you must be making on-time payments.
• FHA loan payments may not exceed 29% of your monthly income.
• All your credit combined including your FHA loan, may not exceed 43% of your monthly income.
• Must be able to pay a minimum 3% down payment.
• FHA will not exceed a 97% loan to value.
• FHA Loan limits may not exceed state and county loan limits. (Find your state and county FHA loan limits)

Understanding Debt to income & Loan to Value

• Debt to income: Debt to income is considered as the ratio of all the monthly payments a borrower is making in comparison to their monthly income. This does not include bills such as utilities. For Example: If the borrower has a monthly income of $1,000 and pays monthly payments of $400 which go to their car payment and perhaps a student loan, than their Debt to income ratio is 40%. This is because $400 is 40% of the borrower $1,000 monthly income.
• Loan to Value: Loan to value is considered as the ratio of the loan amount in comparison to the value of the property. For Example: If the borrower has a property that is appraised at a value of $100,000 and they owe $80,000 on the current mortgage for that property. The Loan to value or "LTV" is 80%. That is because $80,000 owed is 80% of the $100,000 value of the home.

Additional FHA Loan Requirements

Note: Getting a Fixed Rate FHA Loan does not have additional Loan Requirements.

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