Basics to Qualifying for a FHA Mortgage Loan

The FHA mortgage loan program offers some of the most flexible financing available for today’s home buyers! Unlike qualifying for a VA Mortgage loan (where you must be a qualifying Veteran for a VA home loans ) or a USDA Home Loans where there is a “footprint” or Eligibility Map of where you can purchase – FHA has far fewer restrictions!

FHA does have Maximum Loan Amounts, which vary per county – but other than that, just about anyone who wants to purchase an Owner Occupied Home can do so!

Many of our clients are Single Parents, and we are able to use the Mortgage Tax Credit and FHA Mortgage Loan Program together to make it easier to buy a house for their family there are several programs, in fact that make it easier for Single Parents, and young families in NC to afford a home!

You do NOT have to be a First Time Home Buyer to use the FHA Mortgage Loan program, however, those who ARE first time homebuyers (and qualify) can obtain a grant for 3% of the down payment.  This is a HUGE benefit, and many Banks and Mortgage Brokers in North Carolina do not offer the NCHFA Programs – but we do!

Here are the Basic Guidelines:

• You can Own property somewhere else…. meaning if you move to NC from Ohio (for instance) and you own a property there, you can still qualify for a FHA mortgage loan in NC! (but there are some details you need to remember about using rental income so click here to learn more!)
• You can get a Gift for the Down payment!
• We can use income from a Second Job if you’ve had that job for at least 18 months, and/or you have a history of working 2 jobs! FHA Mortgage Loan underwriters will count this income way before other mortgage programs allow us to.
• Minimum credit score requirements for FHA Mortgage Loans are more difficult to pin down.  In GENERAL – you need at least 12 months of “clean credit,” and no collections or judgments in the last 12 months.  If you are new to the credit “game” it’s going to be tough to get a loan, but we do have some investors that will help with “non-traditional credit.”  Medical Collections that are only a couple of hundred dollars  do not generally need to be paid – however, if you have thousands and thousands of dollars of collections outstanding, even if they are medical related, they will probably require that they be paid off.
• Student Loans that are currently in deferment do NOT count in ratios for a FHA Mortgage Loan, like they do for USDA Home Loans.  If you have outstanding Student Loans, you will need to make payment arrangements, and the underwriter will likely require that you make a few of them on time before loan approval.
• FHA Mortgage Loan Guidelines for folks who have been through a credit turmoil in the past are more lenient.  The waiting period after a short sale, foreclosure or bankruptcy is only 2 years, and there are some exceptions to this rule.
• Debt To Income Ratios for FHA Mortgage Loan programs are “loosely” 33/43.  This means that based upon your GROSS income, you can have 33% of your monthly income going to your housing expense (which includes Principal and Interest, Taxes, Insurances and Home Owner Dues, if you have them!).  Then you take your Gross Monthly Income and only 43% of your income can be gong to TOTAL debt – which includes the Housing expense above, but it also includes the items which report to the credit report (car payments, credit cards, etc.)
• The Down payment for a FHA Mortgage Loan is only 3.5%! This money can come from a Gift, from the sale of an asset, or from the NC Home Owner Affordability Fund (NCHFA) that will give qualified buyers 3% of the down payment with a forgivable grant!
• You do not have to count child care payments!  (WHEW!)
• You can use a non-occupying co-borrower.  This means that if your parents want to help you by being on the mortgage loan, you can use their income and assets to qualify.  BIG, BIG, B-U-T here… you can not have sorry credit, and overcome that with a co-borrower. 
• The maximum loan amount for Wake County and Johnston County in NC is $271,050.  The maximum loan amount in Orange and Durham Counties is over $330,000!
• You can STREAMLINE refinance to a lower rate FHA Mortgage with minimal costs!

If you are considering a purchase or refinance and have questions about FHA mortgage loan financing – please call Steve and Eleanor Thorne 919 649 5058.  We are NC Mortgage Experts, and we know what Underwriters are looking for, and how to make your unique situation work!