Everything That You Should Know about FHA Loan Requirements Texas
Are you a first time home buyer or one who has not owned a home in the last three years? If you are any of the mentioned ones, then you can fulfill your dream of homeownership with an FHA loan. Guaranteed by the Federal Housing Administration and offered by FHA-approved lenders, it is a specially designed home loan program.
But like any other home loan, these loans also have some requirements. You need to fulfill FHA loan requirements Texas to get approval. Eager to know about the requirements? Here, we have listed down for you –
- Down payment
As FHA is a government-backed home loan, the down payment requirement is more lenient than traditional loans. The minimum down payment requirement is 3.5%. But it can vary depending on your credit score. The higher your credit score, the lower down payment you need to make. Besides, the down payment requirement differs from lenders to lenders. So, you should try to come with a higher down payment. The good news is that FHA accepts gift money for your FHA down payment. So, if you find it difficult to arrange the down payment, you can ask your family members and friends to arrange it for you and make the down payment. You can also apply for down payment assistance programs.
- Credit score
The FHA programs allow borrowers to get approval even with a 500 credit score. Though the FHA program is technically available to these lowest-credit-score borrowers, mortgage lenders often ask for higher credit scores for approval. And the credit score requirement can vary from a lender to another one like a down payment. So, though it is possible to get approval for an FHA loan with a 500 credit score, you should try to come with a higher credit score for easy approval.
- Debt-to-income ratio
The FHA needs a DTI of less than 50. It means that your total monthly debt payment should not be more than 50% of your pretax income. It includes debts, which you are not actively paying. For student loans in deferment, your FHA loan underwriter will include 1% of the total of the loan as the monthly payment amount. If you are currently repaying other kinds of loans, underwriters will use 5% of the loan’s total to calculate your DTI.
- Property approval
The property you want to buy with an FHA home loan program, whether it is a condo, house, a multifamily home, or manufactured home, has to meet the minimum property requirements of FHA. The FHA wants to ensure that the home is a good investment and it meets the basic safety and livability standards.
Besides, you need to come with documents like a valid Social Security Number, proof of U.S. citizenship, legal permanent residency or eligibility to work in the U.S., and bank statements.
If you want to know more about this loan requirement, then ask an FHA-approved lender and proceed accordingly.