FHA Mortgage Loan Requirements

FHA stands for the Federal Home Association and this association is managed under the U.S. Department of Housing and Urban Development or HUD. HUD’s official website can be found at: www.hud.gov, and is the primary source of this article. Additional information regarding specific topics can be found in the links provided throughout this article.

FHA offers Basic Mortgage Loans to help individuals seeking to buy a single and family home. More specifically, the FHA provides mortgage insurance on loans made by FHA–approved lenders. HUD doesn’t actually distribute the funds directly to those who wish to buy a home. The approved lenders make loans through FHA insurance programs (See GovLoans.gov for more information).

This process was created to protect lenders from losses resulting from homeowners defaulting on home loans. FHA-insured loans are an incentive because they require small cash investment to close a loan and they have less rigorous requirements. Overall, there is more flexibility when considering income and payment ratios. The cost of the mortgage insurance is the homeowner’s responsibility and typically is included in the monthly payment. “In most cases, the insurance cost to the homeowner will drop off after five years or when the remaining balance on the loan is 78 percent of the value of the property -whichever is longer” (FHA Mortgage Insurance).

So what are the requirements for this loan?

Well just as the approved lenders vary, it depends on several factors. Generally the requirements for the most popular FHA home loan, the 203(b), include an income analysis, in which debt ratios are considered. These debt ratios vary by state and determine how much you can afford to borrow. Another requirement is the borrower must meet standard FHA credit qualifications. Under this loan program the borrower is eligible for approximately 97% financing. Therefore, the borrower must be able to finance the upfront mortgage insurance premium into the mortgage. Another requirement is that the borrower must be able to pay for the annual premium. Eligible properties, for this specific loan must be “one-to-four unit structures”.

To find out what requirements you need to fulfill specifically, I recommend visiting www.govloans.gov and taking their interactive questionnaire to determine the requirements you need to obtain this loan. Also visit the links provided in the article because requirements vary by a number of factors and these websites are tailored to finding which loan and options are right for you.

Sybria White

Sybria White

Sybria White is a senior at the University of North Carolina at Chapel Hill. Upon graduation in May 2010, she will leave Carolina with a Bachelor’s Degree in Sociology, a Certificate in Career Development and will be awarded a Public Service Scholar. She plans to attend graduate school to pursue a Master’s Degree in Public Health following taking a year off to contribute to a National Service Program, such as AmeriCorps. Her undergraduate career has taught her the value of a sociological perspective, which has influenced her dedication to public service. She is a volunteer for W.D. Hill Recreation center, Peer mentor for minority students and has served as an active member of several campus organizations such as Sociology club, North Carolina Health Careers and Access Program, Community Government, and Minority Advising just to name a few.

Apart from contributing public service and active involvement on campus, Sybria is very passionate about creative writing and writing in general and hopes to bring a sociological point of view to her articles. Her interests outside of writing and public service include reading books concerning fashion and spending time with her family.

A well rounded curriculum involving Business and English academics in addition to sociology, have helped shaped this young writers’ unique voice. She is eager to share her newly acquired skills and looks forward to helping others approach every day problems from a new, and perhaps, sociological outlook.
Sybria White

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