What No One Tells You About Qualifying for an FHA Loan

Qualifying for an FHA Loan - The Tuttle Group

Qualifying for an FHA Loan - The Tuttle Group Mortgage lenders in Dallas, Texas, often help homebuyers get FHA loans. Before applying and qualifying for an FHA loan, you’ll need to understand what lenders require to qualify for one.

What Is an FHA Loan?

The FHA (Federal Housing Administration) loan is a type of mortgage insured and backed by the U.S. government. This loan is ideal for first-time homebuyers or repeat homebuyers who have lower credit scores or minimal money to use as a down payment. Because the government insures an FHA loan, lenders are often more willing to give homebuyers with lower credit scores this type of loan.

What Qualifications Do I Need for an FHA Loan?

While qualifying for an FHA loan with a poor credit history or score is possible, you’ll still need a score of at least 580, depending on what the lender requires. You must also come up with a minimum of 3.5% of the purchase price for the down payment and have a reasonably good credit history.

Some lenders will consider giving you an FHA loan if your credit score is below 580, but you’ll need to come up with 10% of the down payment. If you have declared bankruptcy, you must wait two years before you can apply for an FHA loan and three years if you’ve had a foreclosure.

Can I Use Funds From My FHA Loan for Renovations?

FHA Loan in Dallas - The Tuttle Group If you find a house that needs repairs or renovations, you’ll want to work with a qualified Dallas mortgage lender who understands the different types of FHA loans. You can ask for an FHA Limited 203(k) loan that lets you finance up to $35,000 for home renovations or improvements. You must work with an FHA appraiser to determine which repairs or renovations qualify for the FHA Limited 203(k) loan.

What Are the Cons of an FHA Loan?

Homebuyers with low credit scores or minimal down payment money benefit the most from an FHA loan. However, this type of loan is not for everyone. If you want an FHA loan, you need to make the house you’re planning to buy your primary residence. In addition, you must pay the mortgage insurance premium (MIP) for the life of the loan if you’ve only put 3.5% toward the down payment.

Your lender will also look at your debt-to-income ratio (DTI), which should be 43% or lower. The lender might consider giving you an FHA loan if you have a higher DTI as long as your credit score is good and you can put more money toward the down payment. Also, keep in mind the FHA loan has a maximum, and in the Dallas-Fort Worth area, the limit is $362,250. If you want a home with a higher asking price, work with your Dallas mortgage lender to find a different loan.

When you’re looking for the best mortgage lenders in Dallas, Texas, contact our team at The Tuttle Group. Our Dallas mortgage lenders will work with your budget and credit score to assist you with qualifying for an FHA loan.

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