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What are the Most Common FHA Loans Requirements?

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  • Written By: Autumn Rivers
  • Edited By: Andrew Jones
  • Last Modified Date: 23 September 2016
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FHA loans are known for helping those with low income or poor credit buy a home. While the regulations are typically less strict than conventional loan types, it is still mandatory to meet the FHA loans requirements in order to qualify. For instance, applicants are usually expected to have steady income for at least two years before asking for this type of loan. The credit score should be decent, though some applicants with either poor credit or no credit at all can still qualify with certain stipulations. Additionally, past credit problems, such as bankruptcies and foreclosures, should be at least a couple years old.

One of the most stringent FHA loans requirements is that applicants typically need to provide evidence of employment for at least two years. It is usually most impressive for the two years to be with the same employer, though this is typically not required. In addition to steady employment, applicants usually need to show that their income has either been the same or has increased in the last two years. This provides evidence that the homebuyer will be able to pay the mortgage on time every month, as they are unlikely to be out of a job any time soon.

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The credit score of applicants can be poor or fair for an FHA loan, unlike other loan types. In fact, some accepted applicants have no credit, and may end up using their FHA loan to start building it up. Of course, such people can usually expect to make up for their lack of credit in other ways. For instance, FHA loans requirements may request that they make a higher down payment, or show that they make a particularly good amount of money despite their poor or nonexistent credit. They will also likely be expected to show that their debt-to-income ratio is good, which means that they have far more income than expenses.

Though the FHA loans requirements allow applicants to have past credit problems on their record, they should not have occurred recently. For example, bankruptcies usually need to be over two years old, while foreclosures should be about three years old. Thus, FHA loans requirements permit less time to elapse between credit problems and the application process than conventional loans do. Of course, those who receive an FHA loan after such issues are usually expected to have perfect credit since then, as this shows that they are likely to pay their mortgage loan on time, despite their issues with doing so in the past.

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