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FHA loans for Purchase or Refinancing.

FHA Credit Score Requirements for Idahofha, boise, home, loan, nampa, mortgage, caldwell

The Federal Housing Administration or FHA has been providing low interest, low down payment loans since its creation in 1934 under the National Housing Act of 1934.  And since then, FHA has help millions upon millions of people get home loans.

FHA loans are known for their flexible guidelines, and lower FICO score requirements.  While Conventional loans, that are provided by Fannie Mae and Freddie Mac tend to have more stricter guidelines and high FICH score limits, FHA relies on guidelines that are less stringent.

FHA FICO Score Requirements

FHA requires a minimum of a 500 FICO score in order to be considered for a home mortgage.  This score, from 500 to 579, also require a higher down payment.  With FICO scores in this range, a borrower needs to bring in a minimum of 10% of the purchase price towards down payment.  For borrower who have FICO score over 580, the down payment requirement is reduced from 10% to 3.5%.

Mortgage Lenfha, 3.5%, boise, 10%, home, loan, mortgage, nampa, caldwellders do have the option of adding on additional layers or requirements for lending, and some put their Minimum FICO score at 620, but shop around, at 1st Choice, we currently (as of 10/28/2017) have lenders willing to go down to 500 FICO scores in Idaho.

FHA Down Payment Sources

With regards to down payment, FHA also has many avenues that allow for home borrowers to get the down payment from many different sources.  Sources of Down payment can include:

FHA Qualified Homes and Loan Limits

FHA also allows for a wide range of homes to get a mortgage on.  FHA isn’t just for single family homes.  A borrower can also look at purchasing duplexes, triplex and fourplex homes, as long as at least 1 of the units is owner occupied.  Borrowers can also finance manufactured homes, modular homes, Townhouses, and Condos.

FHA also limits how much it will do a home loan for.  FHA Loan Limits are Geographical in nature, so here in Idaho, the loan limit say for Boise, Nampa, Caldwell, Meridian is $275,665.  But if you go to say Sun Valley or any towns in Blain County, the limit jumps to $636,150 for a single-family home.

This isn’t purchase price limit, but if a FHA borrower want to purchase a home in Eagle, Idaho, and the purchase price is $350,000, they would have to bring in $74,335, in order to bring the loan amount down to the FHA limit in Ada Count of $275,665.00

And what if the homes need to have some items fixed up.  FHA has rehabilitation loans available also, called 203K loans.

fha, 203k, boise, home, nampa, loan, caldwell, mortgageFHA 203K loans

FHA 203K loans come in 3 flavors, depending upon how much repairs are needed.  The first is a 203K Limited, which means the total repairs are under $5000, and do not require any type of building or city/county permitting.

FHA 203K Streamline is for properties that need $35,000 or less in repairs and is not needing any type of building permit.  And the last one is the FHA 203K Full, which is only limited by the areas FHA loan limits.  And can be a total renovation of the existing home.

Can anyone apply for a FHA Home Loan?

FHA loans are available to all US Citizens, and permanent resident aliens.  Non-permanent resident aliens are potentially eligible with the proper documentation.

FHA loans are also for 2nd and 3rd and 4th time home buyers, so you do not need to be a first-time home buyer in order to qualify.  Now if you are a 2nd or 3rd, and want to keep your existing home, that existing home cannot have a FHA mortgage currently on it. 

Time to apply, click here to start FHA loan application

What about income for FHA mortgages?

FHA also has less restrictive requirement for income, a borrower’s Debt to Income or DTI ratio can be as high as 54.999%.  This means if your gross income is $3300, then multiply by 54.99% and you get $1782.00.  You would then minus any installment, revolving, medical, student loan and other monthly payment debts from that.  The remaining number is what you could be eligible for a home loan.

DTI for FHA loans will depend upon FICO scores also, a borrower with a 500 FICO score will be limited to a lower Debt to income ratio, around a 38%, while a borrower with a 720 FICO will be allow to go higher.

FHA also is more generous when calculating income, this include calculating overtime, bonus income.

Mortgage insurance and FHA loans.

One of the way that FHA is able to do such a low-down payment is they will tack on FHA Mortgage Insurance to each loan.

Mortgage insurance is protection against significant loss to the lender if a home is foreclosed upon.  So, if a home is foreclosed, the lender will sell the home in a auction or as a foreclosed home.  And if there is a deficiency, the difference between what is owed on the home and what it is sold for, then FHA will dip into the Mortgage Insurance fund to pay the lender back for some or all of the deficiency.

Currently, FHA Mortgage Insurance Rates are, as of January 2015:

                Upfront Mortgage insurance of 1.75%, this is tacked onto the loan amount.  So say you are purchasing a home for $100,000.  You then put 3.5% down or $3500 for the down payment.  That leaves you a base loan amount of $96,500.  Then FHA will tack on 1.75% to the $96,500 or $1688.75, for a final loan amount of $98,188.75.fha, home owners, boise, home, nampa, mortgage, caldwell, loan

                Monthly Mortgage Insurance.  Currently FHA monthly mortgage insurance is .85%.  In the same scenario above, with the loan amount being $98,188.75, you multiply that amount by .85%, and you will get $834.60, then divided that by 12, and that sum is $69.55.  $69.55 will be added to your monthly payment.

Both of these monies go into the FHA MI fund, which pays out the deficiencies.  And if the fund gets too big, then FHA will reduce the Upfront or Monthly or Both.  But if the fund gets too small or goes negative, then FHA has the option to raise the two or both Mortgage Insurance rates.

Below are a couple of tables that go over FHA Mortgage Insurance Rates:

If your FHA Mortgage is for more than 15 Years

Loan Amount

Loan to Value

Annual MI Rate

$1.00 to $636,149

95% or higher

0.85%

$1.00 to $636,149

94.999% or less

0.80%

If your FHA Mortgage is for 15 years or less

$1.00 to $636,149

90% or higher

.70%

$1.00 to $636,149

89.99% or lower

.45

 

FHA is a Great Home Loan Option

FHA has been around for almost 100 years, and has provided millions of borrowers a chance to own a home.  There are many benefits to a FHA home loan, and we have covered a lot of them.  But there are more, so give 1st Choice Mortgage a call TODAY, so we can help you explore the benefits of being a home owner with FHA.

For more information about qualification, click here.

 

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