Buying a home is one of our biggest dreams. However, not having enough money often prevents us from fulfilling this dream. But now, you can buy a home of your dream with an FHA home loan program. Backed by the Federal Housing Administration, this loan is the ultimate choice for first-time home buyers.
The minimum FICO score to qualify for an FHA loan program is 500. But as the FHA is not the lender, it is the insurer, and it is the lender who sets their minimum credit score requirements, it can vary from a lender to another one. If you don’t know your credit score, then check it for free. It is always better to have a good FICO score. But even if your score is 500, you can apply for an FHA loan program. There are several lenders, who offer an FHA loan 500 credit score Texas. But before you apply for the home loan program, here are some of the things that you should ensure.
- Have verifiable income
The first and the most important requirement to get an FHA loan is a steady income, which can verify with pay-stubs and tax returns. Generally, mortgage lenders want to see that you have worked for a year or two in the same field, even if not with the same employer. Under the FHA home loan program, a lender may accept a shorter work history.
- Capability to pay the housing payment and the existing debt
The major factor in qualifying for an FHA loan is whether you can afford the payment. As a rough guideline, your mortgage payment should not be more than 35% of your income before taxes and your mortgage payment along with other monthly debt payments including car loans and credit cards should not be more than 48 percent of your income. You can use a calculator in order to see approximately how much house you can qualify for. In case you can’t meet those ratios yet, give stress on paying off as many other debts as you can before purchasing a home.
- Have an established credit history
An established credit history is another requirement for an FHA home loan program. At the bare minimum, the Federal Housing Administration needs that applicants have an established credit history with at least two lines of credit, for instance, a student loan and a credit card.
- Buy a home that does not exceed FHA loan limits
There are federally-set limits to how much you can borrow with an FHA loan that varies by state, as well as a country. Fortunately, however, the limits are high enough to help you buy a home of your choice. But it is always better to ask your lender about this before finalizing a home.
- Understand the costs of an FHA loan
The downside of an FHA loan is the mandatory mortgage insurance (PMI). It is the insurance that you need to pay as a borrower – both upfront and monthly – which protects the mortgage lender if you default. PMI is required for the ones who put less than 20% down on a home.
So, now, without waiting any more, opt for a reputable mortgage lender and apply for the loan as early as possible.
Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.
