There are pros and cons of FHA financing – but it just got better for those of us in the Triangle because our minimum loan limit is $295,000.
An FHA loan is a loan insured against default by the Federal Housing Administration. So, in the event the loan should ever go into default, the FHA will pay the lender. In these times of higher default on mortgages, this makes FHA financing very attractive – and it’s one of the few loans that Wall Street is purchasing!
Almost anyone can get an FHA loan. There are no income limits, like many other first time home buyer programs. To qualify you need to meet certain debt to income ratios – and in general those ratios mean that you should have no more than 43% of your gross income going to monthly debt.
FHA does not include child care in this ratio – or insurance, or utility bills. They are pretty much just counting your housing payments, credit cards and car payments (and BOAT payments my husband says to remember those too!).
FHA requires borrowers to have a minimum credit score of at least 600. There are some circumstances where this score could be lower – and there are now MANY cases where the underwriter is looking for a higher score of 620, because Fannie Mae and Freddie Mac are going to STOP purchasing loans with scores lower than 620.
The qualifying “hurdle” for an FHA loan is that you have to be able to prove your income. We must have documented income for these loans, certainly self-employed people get FHA loans everyday – but we will need tax returns that verify your income.
So again – in the Triangle, if you need to borrow $295,000 or less – FHA might be the Ticket! Please contact Steve Thorne, 919 649 5058 to get Pre-qualified! Connect With Us on Google +