What Are the Requirements to Get a HUD Loan?


Quick Answer

The requirements to get a HUD loan include a down payment, a credit score and debt ratios that meet HUD’s criteria, according to SFGate. HUD sets lending limits based on the location of the home a borrower desires to buy.

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Full Answer

FHA loans are mortgage loans insured by the government, and the U.S. Department of Housing and Urban Development sets the lending criteria to obtain these loans, states SFGate. FHA loans have more lenient requirements because they are geared toward families with low or middle incomes who want to own a home.

Homebuyers can make a down payment of at least 3.5 percent of the property cost to qualify for an FHA loan, says SFGate. As of 2010, HUD requires a minimum credit score of 580. Some financial institutions may require different credit requirements, although the credit limits are typically lower compared to non-FHA loans.

HUD considers the borrower’s front- and back-end debt ratios to qualify for an FHA loan, notes SFGate. The front-end ratio is the maximum-possible monthly payment for a house, whereas the back-end ratio is the monthly limitation on the borrower’s overall debt. Calculating the front-end ratio involves multiplying a person’s gross monthly income by 29 percent. An individual can determine his back-end ratio by adding the possible monthly house payment and his overall, fixed-debt monthly payments.

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