We talk to people everyday who have questions about qualifying for a FHA Mortgage Loan in NC. FHA Underwriting Guidelines, are actually pretty straightforward.
Unlike qualifying for a VA Mortgage loan (where you must be a qualifying Veteran) or a USDA Home Loan (that requires that you meet income limits for your county and the property must fit within the USDA RD Loan Footprint) – FHA has far fewer restrictions! They do 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!
- Maximum Loan Amounts: Maximum FHA Loan Limits Vary per County, and are subject to change each October. View Current FHA Loan Limits for all Counties in North Carolina. The FHA Maximum Loan limit for Wake County in 2018 is $318,550. The Maximum Loan Limits for NC normally change each December.
- FHA Qualifying Income Requirements: FHA is flexible with income used to qualify buyers. They will work with people who are in the IT field, and are on contracts, they will count part-time income, and Child support and Alimony Payments. For the most part it’s also important to remember that when starting a new job, you will probably need to receive your first full paycheck before you can close on your new home.
- Ratios for FHA Loans: In General, FHA Underwriters take your Gross Income (Before taxes come out), and divide that by 12. Then they multiply that number by 28% to find your maximum monthly housing payment can be. (We’ve seen people who did not have a tremendous amount of debt qualify for more than this number, that’s why we have you talk to a Lender!) They take the Gross Monthly Income and multiply it by 41% to find out what your TOTAL monthly obligations can be (meaning house payment, insurance, taxes, car, credit cards – etc). Although we know it’s a big expense for many families – FHA does not count Child Care in your qualifying ratios (and they don’t count cell bills, or insurance either!)
- FHA Credit Score Requirements: For the most part, FHA Underwriters will require a middle credit score of 620, and they want to see 3 open trade lines on your credit report, that have been there for at least 12 months. 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. 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.
If you’ve been hurt by the recent economic turn down and have a bankruptcy, foreclosure or short sale in your history – FHA will still do a loan for you! The bank will make a FHA Mortgage Loan with minimum credit scores between 600 and 620.
- FHA Down Payment Requirements: If you are purchasing a “regular” house (not a distressed home), FHA requires a 3.5% down payment. The down payment can be a gift, it can be from the sale of an asset (we had one borrower sell a bass boat so he could buy a house), savings and… if you qualify for NC Housing Finance Agency money up to 3% of this can be given to you by the Government (with a few strings attached of course).
- FHA Non-Occupying Co-Borrower: FHA has a unique qualification / underwriting guideline, that allows you to purchase a home, with a relative that does not live in the house… “The FHA Non-Occupying Co-Borrower Program” is sometimes, referred to in the Mortgage Industry as a “Kiddie Condo,” because frankly it’s perfect for purchasing a house for kids in college! We also see this program often used when children want to help an Aging Parent qualify for a home!
- FHA Construction Loans: FHA has a program for building a home with as little as 3.5 % down payment. If you purchase a lot, or have a family gift of some land, this could be a great program. The Builder’s will need to be approved by us. We do these FHA Construction Loans as a “one time close” and then at the completion of the home, we modify the loan into a permanent loan. The minimum credit score these loans will be a little higher, and you will need 2 months of reserve payments.
- HUD Homes with $100 Down Payments: If you are purchasing a HUD foreclosed Home, and we write it in the contract – HUD will allow you to get a FHA mortgage on that property with a $100 down payment. HUD will also contribute to your closing costs. The buyer must be an owner occupant to qualify, and they must offer full price. You must be willing to live in the property for a year. You can not combine this program with a FHA 203K.
- FHA Good Neighbor Next Door: If you are purchasing a HUD Home in a qualifying “Revitalization” area, HUD allows Teachers, Firemen, Police Officers, and qualifying EMT’s to purchase the home at 50% of the asking price. They must be willing to Owner Occupy the home for 3 years – and you can not own residential real estate for 12 months prior to the offer.
- FHA PMI Charges: FHA Charges a 1.75% upfront mortgage premium on all loans, in addition to collecting PMI (mortgage insurance premiums) each month. Depending on your tax situation, these premiums could be tax-deductible – and they serve to insure the lender, and FHA against defaults and foreclosures.
- FHA Appraisal Requirements: With a HUD Foreclosed Home, there’s already an appraisal that has been done – If the appraisal is more than 6 months old, we can request a new one, and that’s what you would likely use to make an offer from. ALL FHA appraisals are done by a FHA Approved Appraiser. While they do not have the strict property guidelines that USDA Home Loans do, the house still needs to be in fairly good condition, the heat has to work, no broken windows, or torn up floors. FHA is highly concerned about lead paint. If a shed, that is not attached to the home (for instance) looks like it has not been painted in 20 years – they could require that it be painted.
- FHA and Condos: FHA’s made some pretty significant changes to it’s Condo Approval process. Now, all Condo projects must be RE-Approved every 2 years. Additionally, 50% must be owner occupied or sold to owners who intend to reside in the unit. Also, at least half (50%) of all units must be sold before FHA will issue a mortgage on one. Here’s a list of condominium projects in Raleigh that are already FHA approved.
- NC Housing Finance Agency: FHA will allow us to work with NCHFA to offer “special” financing opportunities. These include a 3% down payment assistance from the State, lower acceptable Credit Scores (640 credit score) and Mortgage Credit Certificate (MCC) which helps you bring home more money, and qualify for a slightly larger home! The NCHFA program does have income restrictions and property restrictions – so be sure to ask us if you might qualify!! The program is NOT just for first time home buyers – and allows us to offer the benefits to anyone who has been renting for the last three years.
If you have questions about purchasing a home in NC using a FHA Mortgage Loan, or if you have more questions about FHA Underwriting Guidelines please call Steve Thorne at 919-649-5058. We do many FHA loans, we offer today’s lowest mortgage interest rates, and we can help!
Hi, Can you help us with an FHA Loan in Charlotte/Mecklenburg County? First time home buyers, 3.5% down, both have credit scores over 670. Found a home for 200K. Want to make offer. We have been pre-approved for an FHA loan with a credit union, but want to compare closing costs, fees, etc. and hope to get a better rate. Please contact.
Thanks!
WM
We would love to help you! In general Credit Unions in NC do not offer fixed rate mortgage programs – only ARMS. The closing costs should be similar. Please call us at 919 649 5058
Hi,
My husband and I have a few questions to ask in regards to the programs available for purchasing a home. We are interested in FHA or USDA. Our concern is credit at this time. Hopefully you can guide us in the right direction.
Tamara – We would be glad to help. If you have your credit report, go ahead and look at the OPEN accounts. You want to have at least 2 open Credit Cards with VERY LOW (not zero) balances. If you keep more (new) “bad things” like collections from coming onto your credit report, and you add revolving credit you should find that you have much higher scores in 6 to 9 months! Check this list of 4 things you can do now out. When I tell folks to get current, I am NOT talking about settling Medical Collections. I’m talking about a car payment that might be behind… If you still have questions, call us! We’d love to help!
Are you guys available now to speak with us?
Tamara
I have a question about 203K loans in conjunction with the NCHFA 3% down payment assistance program. Can I use these two programs together? If so do you know of a lender that will help me with this?
I think we talked – but just in case… you CAN do the NCHFA 3% down with a FHA 203k loan – but they are really hard to get through the system and very few lenders do them. Your best option with that is Wells Fargo or Bank of America, unfortunately.
Hi Eleanor,
My husband and I are interested in purchasing a home in the Greensboro/Winston-Salem area. I’m currently a PhD candidate finishing up my last year of graduate school as a psychology intern with a local school district with credit scores ranging from 680 – 720. My husband was just recently hired as a teacher for a neighboring school district and has credit scores ranging from 588 – 670. Would qualifying for a first time home loan be difficult for us? At this time, our household income is around $54K (although my salary will drastically increase post-graduation). Also, we also wanted to know if we should begin the rate shopping process now (although he doesn’t have his first month’s pay stub as of yet). We are looking to move out of our current apartment by January 2014.
Hey! Thanks for asking. You do want to get pre-qualified as soon as possible. It’s not too early. That way we can pull a mortgage credit report, which will have scores that are a little different than the ones you get from the Bureaus yourself. In fact credit reports for Insurance, Credit Cards, Cars and Mortgages all have different scoring models. We can work off of your current income, or we can tell you what you would qualify for with an income that’s $10k more than you are currently making (for instance). Going ahead with the process will also allow us to address any questions an underwriter might have regarding student loans that are in deferment.
I encourage you to call us at your convenience – it will take about 20 or 30 minutes for us to get the information together for you, and then we can provide you with payment options.
As far as locking into a mortgage rate at this time – you are probably a little early on that – but there are extended lock options available. Congratulations!!!!
I have a question about qualifying for mortgage programs. We have a gross income of $3667 per month and 2 vehicle payments of $650 total. Would we qualify for a better loan by paying one of the vehicles off or putting down a larger down payment? We are currently selling our home and expect to make about $25,000 in proceeds. So far the largest loan we qualified for is $150,000 + 10% down. Thanks!
MOST of the time, we suggest that folks pay auto debt off. Call us when you get a chance at 919 649 5058, and we’ll help you find the best way to use that equity, and qualify for more. Have you looked at USDA? They don’t require any down payment, and offer the lowest PMI rates.
In February, my wife and I made an agreement with a family friend to live in their mother’s house and clean and pack all of their mother’s things as well as make repairs in exchange for paying rent. After we got started we talked about buying the house. We have been preapproved for an FHA loan. The appraisal has been done and the title search is in process. Now the lender says that because we have been living in the house we are trying to buy there is a rule that the maximum loan amount must be reduced by the fair market rent determined by the appraiser over the time that we have lived there. That comes up the $7200 over 9 months. That amount would more than double our out of pocket expenses just to get the loan. The are also not considering any of the time that we and family members spent cleaning, sorting, packing, and selling the things that were in the house nor the time and money spent on repairs. Have you ever heard of anything like this? Is there anything we can try or tell the underwriter to get around or at least reduce this penalty?
Kevin – I feel like there’s a way to make this work, I’m checking with our Underwriting Department. I understand the issue, and assume part of it stems from a “non-arms-length” transaction concern on the part of an Underwriter. I’ll be back with you directly with our findings.
Hope you can help! I recently moved to the Charlotte area and have found a great foreclosure that I am under contract for $152k. I have been pre-approved with a FHA loan, problem is that the bankids owns the property, and the listing agent suggested no FHA on this home. After some research, we found that the home needs to have the exterior boards that wrap the home replaced due to age. The boards are split, cracked and look terrible from weathering for 30+ years. We tried to go conventional, but a 585 score is keeping us with an FHA option alone. The 20th plan, is this something that we may qualify for in this situation. We currently have approx 25% of the loan amount available for down punt and repairs. Any thoughts for us?
You need an FHA 203k Loan. With the credit scores you are describing – you are likely going to need to raise them before anyone will be willing to approve the loan. Although FHA will go down to a 585, the added risk of a home in poor condition makes it much more difficult to approve. You can ALWAYS call us, and we’ll go over (for free) ways you can quickly boost your credit scores. 919 649 5058
What wouls the closing costs be for a $99,000 purchase price home on an FHA loan?
If there’s no origination fee charged, and you are putting 3.5% down payment and NOT applying for the Mortgage Tax Credit – in North Carolina, in GENERAL you closing costs (NOT PREPAID EXPENSES) would be approximately $2600. That is taking a TON of unknown items into consideration… so if you are working on a budget, PLEASE call us. This is REALLY a rough, rough number – meaning a place to start. In addition to closing costs, you would still be responsible for Hazard Insurance and Taxes and FHA PMI reserves and Interim Interest. After August of 2015 – we expect Attorney fees to be significantly higher. If that is the case, these numbers will be (understandably) off.
My husband and I are interested in purchasing a home in Gaston County built in 1910 that needs a bit of work put into it. I’m not sure when it was last updated or inspected. It is listed for $115,900 and has been on the market for a little over a year now. I’m absolutely in love with the home but am not sure if it is able too be financed due to the homes age and the work that is needed. I was also unsure if we would be required to pay the full asking price or would be required to pay the total amount in cash. Any insight would be helpful.
Thank you.
Heather, are you working with a Real Estate agent? We know several in that area. Many folks we talk to are in the same boat you are. They find a house, or they pass by a house every day for a while and think “Wow! I could really do this and that to make it MINE.” You get a vision.
When you are buying a house, that’s not where you start. I tell folks all the time – First the LOAN – THEN the HOME. Meaning, you need to talk to us about financing, what kinds of houses will be good candidates for your needs, before you buy a house, and turn it into YOUR HOME.
We love the Belmont, Gastonia, Kings Mountain area – and I know there are some great older homes there. So, to answer your question, you likely would not have to pay cash. There are programs to help you. It will depend on what you qualify for. Please call us, we’d love to help you with your Home Ownership Dreams! 919 649 5058
Hi Eleanor,
Are you able to help with the High Point area? IF so would you email me at dyndhouse@live.com.
Thanks
We do lend in High Point. We’ve reached out to you, and you can certainly call us at 919 649 5058 – we’re snowed in 🙂
Hi,
Recently my husband and I were approved for a FHA loan with a lender but were not happy with the amount we were approved for. My husband is self employed and is currently paying down his debt. He has a good credit score. The bank approved just me and left him off of the loan. They said if he was added to it our loan amount would decrease. After we do our taxes this year we will have a combined salary of $75,000.00 and good credit. My debt is very low. Any suggestions as to how we can be approved for the loan amount we actually want? I know we can afford more than what we were approved. We are also first time buyers in the Charlotte/Cabarrus area.
Thanks!
Melanie
Melanie, we do lots of loans in the Charlotte / Cabarrus County area. Give us a call, and we can give you our opinion – 919 649 5058
Hi I have a question about an fha loan. My husband and I are renting a home in Charlotte, and are looking to purchase it. I am unable to cosign due to medical debt. Is my grandfather able to cosign the loan with him for income purposes?
YES! She can definitely do that. Please call us at 919 649 5058
Greetings. I have just submitted my application for pre-approval but I worry I may get denied due to loans in deferment. I have a credit score of 670 and I am in my last year of graduate school. I plan on starting my doctorates next year. I am a teacher with a gross income of 35K. How much in loans is too mUch when in comes to denial?
You need to buy a house before June 30, 2016
Im interested in learning more about purchasing a home (hopefully via an FHA loan?). My credit score is in the low 600’s, I have a foreclosure, and my annual gross income is $96k. I have open lines of credit (auto and credit card) and student loan debt (lots of it, unfortunately). I currently reside in Charlotte NC and am hoping to purchase in Charlotte or in neighboring York County (SC) as soon as I’m qualified or eligible to do so. Thank you in advance for your time, efforts, and consideration.
First time buyer. 660 credit score. 30k in student loan debt :-/. Only other debt is 8k Auto and a couple credit cards. 60K income. I’m interested in FHA loan.
Carlie – you might qualify! We have a couple of different programs for you. Please call us at 919 649 5058
I am trying to buy a home Leicester at $69900. Single family 3bd 2 bath. Me and my husband both get disability and retirement totaling together about $44k a year. My credit score is a 580. I have a open credit card and some personal loans most have been paid off now but I do still have some open. I have money to put down up to 10%. Can you help?
Forgot to mention the home is in Rocky Mount, NC
Betty we would love to help you. Please call us at 919 649 5058. If we are with someone, we will call you back, so please leave a message 🙂
I called and left a message on Steve’s line. I’m looking forward to speaking with you.
Hi I was just curious of all of the steps We need to take in order to obtain an FHA loan since we are first time home buyers moving to either Durham or wake county? My husband has been on his current job for almost 5 years but that will change when we move. Are we able to obtain a fha loan using his current job and funds?
Jasmine, please call us. If you are not currently living in Durham, but he has a letter of offer from his new employer, we might be able to use that 919 649 5058
Hello I think I have reached out to you before. I was approved for a fha loan about 6months ago. I was told everything was cleared and recently the underwriter stated they needed documentation of $ that was put into my account in May. All my bank statements account for the $but I’m beginning to get worried as we are supposed to close in 3 wks. Would like to keep my options open do you think you can help us? My credit scores are 670, 700, 655
We can definitely help, but you need to contact us ASAP to meet your closing date. With a new file, we will not need the May ban statements, only the 2 most recent statements. 919 649 5058
HI i would like to apply for a FHA loan with my mother as a non occupying co borrower my husband does not have good credit that is the reason why i would like to do the loan by my self and with my mother to help me qualify for a higher loan amount in order to get the house that we would like. my question is with an fha loan in charlotte nc do they also look at the spouses debt. will they take into consideration my husbands debt even though he will not be on the loan? and is this the best loa that i could apply for in order to have a non occupying co borrower help me i do have good credit. thank you for your help!
Ally, I’m so sorry for the delay, we’ve been on vacation. No, your husbands debt will not be considered if he is not on the loan. You are looking for a FHA loan, and we would be glad to help call us 919 649 5058
Hi.
I am trying to buy home in NC, got prequalified by major lender, i am self employed, gave tonne of documents, they keep pushing closing (2 times already), personally, i feel harassed at this point, I have already spent $ 4800 of my money and seller is to a point that I am afraid will walk causing me damage. my score is 645, income is $65K, have $19K in bank, trying to borrow 95K, no bankruptcy or foreclosures. What do you think? I am thinking about looking for local lender(if they can close in 3 weeks) , good idea? or not?
We’ve contacted you directly thank you for your inquiry
Hi!
I am currently on disability (SSD, not SSI), have a 581 FICO, only outstanding debts are medical, and a student loan that current. I’m interested in living in Pitt County and have seen lots of “affordable” homes. Are there any options for me like co-borrower or am I destined to be renter?
Thanks!
you only need a little higher scores – no one is “destined” to live in a rental home!
Can I get a fha loan for a house in North Carolina while I live in Tennessee? I would be moving and finding a new job after the move.
Unfortunately, you would need to make money in NC, or be able to work remotely.
My husband and I are trying to get a home ASAP. We just had our 3rd baby, and we’ve been looking everywhere for a loan company to approve us. We also are located in Shelby nc, and we were wondering if these programs qualify for our area.
Kaitlyn, these programs do work in your area. Please call me at 919 649 5058