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Who is eligible for an FHA loan?

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Quick Answer

The minimum credit score requirement for an FHA loan is 500, as of April 2015, but it varies from lender to lender, according to Investopedia. Documentation of steady income, an acceptable down payment and use of the property as a primary residence are other requirements for eligibility.

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Who is eligible for an FHA loan?
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Full Answer

Though the minimum credit score requirement is 500, the typical score of the borrower who was approved in January 2014 was 688, while the typical applicant who was rejected had a score of 667, explains Investopedia. In comparison, a conventional loan requires a score of 755. A person with a credit score below 580 can be accepted for a loan, but he needs a down payment of 10 percent or higher. Otherwise a 3.5 percent down payment from an accredited source is required. An FHA loan does not require a credit history, and a person can be approved if he has good payment history records.

In order to be eligible for an FHA loan, documentation of steady income is required, Investopedia explains. Income must be stable and continue at least three years after acquiring the loan. The debt-to-income ratio for the loan applicant should be under 50 percent, meaning the total of debt, including potential mortgage, student loans and credit cards, must be less than half of the applicant's gross income.

The home being bought must be the borrower's primary residence, and it has to be habitable, meaning access to running water, toilets, heat, a stove and other appliances necessary for living, according to Investopedia. Anyone who meets these requirements may be eligible for an FHA.

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