How Do You Qualify for an FHA Loan?


Quick Answer

To qualify for an FHA loan, a person must have a valid Social Security number and be a lawful resident in the United States. Additionally, a person must be employed by the same employer for the past two years in addition to having a steady employment history.

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Full Answer

The list of requirements to qualify for an FHA loan is extensive and includes the restriction of new FHA loans solely to primary residence occupancy and having the property assessed by an FHA-approved appraiser. As of 2014, a person’s front-end ratio typically has to be less than 31 percent of his gross income, although it is possible to get a loan approved with a ratio as high as 46.99 percent. On the other hand, a person’s back-end ratio, which includes property taxes, mortgage payments and home insurance, needs to be lower than 43 percent of his gross income, although the approval can go through in cases where the ratio reaches as high as 56.99 percent.

With a minimum credit score of 580, the down payment stands at a 3.5 percent minimum, whereas the minimum down payment goes up to 10 percent in cases where the minimum credit score is in the range between 500 and 579. A person is usually required to be at least three years out of foreclosure and have a good credit before he can apply for an FHA loan. Extenuating circumstances and the improvement of credit can help alleviate the aforementioned requirement.

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