Many clients that have worked with our Birmingham, Alabama team secured their first home through an FHA Loan Program. Ransom Kelly at Assurance Financial is here to tell you more about the wonderful benefits associated with this mortgage. An FHA Loan is a mortgage insured by the Federal Housing Administration (FHA), which may provide less risk for a lender. Most FHA loans come with low down payment requirements and applicant screening that makes home ownership more accessible.
Getting Approved for an FHA Loan
While it is important to save funds and improve your credit score before applying for an FHA Loan, these goals may not be as difficult as you think. Many people are being approved with only a 3.5% down payment required. Even if you have a low credit score, other factors can help someone qualify. Ensure that you are not delinquent on taxes or student loans owed to the government: this can disqualify you. In addition, work with a home that can qualify under the FHA home inspection requirements.
Below is a list of items to gather before you go to apply for an FHA Loan:
- At least two years of W-2, 1099, or other income statements;
- At least two years of tax return statements;
- Adequate documentation of your current income;
- At least three years of tax returns and a year-to-date profit/loss statement (if you own a business or are self-employed.
Qualification Requirements for FHA Mortgages
Here is a list of general eligibility requirements for an FHA Loan approval:
- Have a credit score of 580 or higher, though if you save for a higher down payment, a lower credit score may be accepted.
- Have a down payment savings of at least three percent from an eligible source (a savings account or a gift, though the gift cannot come from someone who will benefit financially from the sale of the home.)
- Have a clear history from Credit Alert Interactive Verification Reporting System (CAIVRS), which helps show that you do not owe other government debt.
- Have the home you purchase must also be your primary residence, or the primary residence of a family member.
- Have the ability to provide mortgage insurance, which can be rolled up into your monthly payments.
As stated, even if your credit score is low, you may still receive a quick approval through this wonderful loan program. Start saving today and look in your area for homes that qualify. If you want to learn more, or need to understand something about FHA Loans, contact Ransom Kelly at Assurance Financial. Our team is happy to work with your family to find your first new home!