We get many customers at First Residential Mortgage who want to apply for an FHA loan. This type of mortgage is relatively easy to qualify for; it was designed to be so. But what do you need to do in order to be found eligible? Here is a quick rundown to help you prepare to apply.
1. Make sure you have a steady source of income.
Before you even think of buying a home, you must be able to afford one. You also need to be reasonably sure you can continue to in the future. The key to that is a solid, reliable income source that you expect to remain stable in the future.
At a minimum, you need to document that you have been employed for around two years. This does not need to be at a single company, but it should be (preferably) within the same industry or profession. The idea is to prove that you are on a stable career path.
2. Boost your credit score to 580 at a minimum.
Even though credit qualification requirements are more relaxed for FHA mortgages than they are for many other types of home loans, there is still a minimum score of 580 that you need to meet.
If it is possible, try and boost your score as far above that minimum as time allows. As is true with other mortgage products, a higher score means more benefits.
3. Learn the FHA loan limits and select an appropriate house to purchase.
Your next step is to familiarize yourself with the FHA loan limits where you live. These are the FHA loan limits for most of southwest Virginia:
Be sure that you are shopping for a home which you can afford with financing within these limits. Otherwise, you will not be eligible to purchase that home using an FHA mortgage.
4. Make sure you can afford the down payment.
Next, you will need to figure out how you will afford the down payment on your new home. Depending on your credit score, this could be 3.5% or 10%.
If you are unable to afford this down payment with cash, there are first time homebuyer programs which may provide you with the funds you need. There may be alternative financing options to obtain the money for the down payment as well.
5. Calculate if you can afford the mortgage payments, including interest, and if you can afford PMI.
Along with your credit score, your debt-to-income (DTI) ratio is another important financial metric when it comes to qualifying for an FHA mortgage.
It is also important for you to think about. If you qualify for a mortgage, will you be able to comfortably make your payments each month? Be aware that FHA loans require private mortgage insurance (PMI) because of their low down payments. Factor this into your calculations before you apply.
The last step to qualifying is to submit your application. If you are well-prepared, the process should go quickly and smoothly.
First Residential Mortgage Can Help You Qualify for an FHA Loan
At First Residential Mortgage, FHA mortgages are among our specialties. We have helped many homebuyers in Virginia to move affordably into new homes with low down payments through FHA financing. As your partners in the application process, we can walk you through each step. To ask any questions you have or to apply for an FHA loan in VA today, please call (540) 838-5868.