FHA Loan Requirements

Eligibility

Not everyone is eligible to obtain an FHA loan. Although the eligibility criterion for an FHA loan guarantee is relatively lenient, these types of loans are not automatically granted to everyone who applies, regardless of credit history and other factors.

Fundamental eligibility requirements for an FHA loan guarantee include:

• The applicant must have the legal right to sign a contract. In other words, a minor will not be able to receive an FHA loan guarantee.
• The applicant must hold legal residency status within the United States. Applicants do not have to be U.S. citizens in order to get approved for an FHA loan, but they must show proof of legal residence.

The FHA does not make the decision as to whether or not applicants should be approved for an actual mortgage loan. FHA merely guarantees the loan, making it more attractive to potential lenders. The decision of whether or not to approve the loan rests on the lender, and each lender has its own qualification criterion.

FHA Approved Lenders

Not all lenders deal with FHA mortgage loans. Before applying for a mortgage loan through a lender, applicants should always check first to make sure that the lender actually processes FHA loans. The lender should also be an FHA-approved lender. A complete listing of lenders approved by the FHA to offer mortgage loans is available on the official FHA website, or you can call your preferred lender and inquire as to whether the lender is FHA-approved.

FHA-approved lenders will process the mortgage application and review it for a variety of factors, depending on the individual regulations of the lender. Applicants can expect to have a review of their credit report in addition to answering questions about their debt-to-income ratio. Even though the mortgage is guaranteed by FHA, the application may still be turned down if the lender comes to the conclusion that the applicant is too great a credit risk.

A loan guarantee from the FHA does not guarantee a mortgage loan approval.

FHA Loan Limits

The FHA guarantees loans only up to a certain monetary amount. The loan limits are different according to what region the house is located in. Contact FHA to find out what the loan limits are for your particular area.

FHA cannot guarantee mortgage loans that exceed the predetermined monetary amount.

Specific FHA Loan Requirements

If you are interested in acquiring a loan guarantee through the Federal Housing Administration you should start by checking out the FHA Prequalification Worksheet. This worksheet will help you determine your eligibility for an FHA loan.

You should be prepared to provide personal financial information such as:

• Information regarding any bankruptcies you have experienced.
• Information regarding past foreclosures on your credit report.
• Information regarding any defaulted student loans.
• Your past and current payment history for rent, mortgages, and recurring bills.
• Your income
• Your debt
• Your savings

Even if the prequalification worksheet determines that you qualify for an FHA mortgage loan, this is not a loan approval. In order to receive an actual approval you will need to apply through a lender. The prequalification worksheet is merely meant to be used as a tool to help you determine your eligibility.

Leniency

FHA loan requirements are slightly more lenient than traditional mortgage loans, particularly with regards to down payments. While most lenders prefer a 20% down payment on a traditional mortgage loan, FHA mortgages can usually be obtained with as little as 3% down.

Although lenders are generally more lenient with an FHA loan application because of the accompanying guarantee, applicants must still display an ability to repay the loan.