FHA Loan Requirements

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FHA loan requirements have been relaxed as part of the Federal government's Housing and Economic Recovery Act, 2008. The purpose of the act is to provide some relief for home owners affected by the housing finance crisis, and to help stabilise the property market overall.

If you are suffering from mortgage stress, you should see whether the new FHA loan requirements will allow you to qualify for an FHA insured mortgage.

FHA Loan Requirements

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1. Age - you must be above the minimum age required to sign a mortgage in your state. There is no maximum age limit.

2. Citizenship - you are not required to be a US citizen, but you must be a permanent resident of the USA who is permitted to work in the US.

3. Social Security Number - you will require a valid Social Security Number; a Tax ID number is not sufficient.

4. You must have a 3% down payment (this will go up to 3.5% as of September 1, when5. The property in question must be a residential dwelling suitable to house 1-4 families.

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5. The property in question must be a residential dwelling suitable to house 1-4 families.

6. The value of the property cannot exceed the allowable maximum for your area and the type of dwelling.

7. You will need to meet the lender's qualification requirements for a mortgage. The requirements for FHA loans are generally more lenient than standard mortgage qualification requirements.

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8. Credit Score - you do not need to have a good credit score to obtain an FHA loan. FHA lenders cannot reject a borrower because you have no credit history. If you have declared bankruptcy in the past, or has a foreclosure, there will be some additional requirements before you can qualify for an FHA loan. Basically, you must have your affairs in order.

9. Income - there is no minimum or maximum income requirement for an FHA loan.

10. Debt-To-Income Ratio - you can use up to 29% of your income towards housing, and up to 41% of your income on the combination of housing plus all other long-term debt.

11. Down Payment - you will need a 3% down payment, but this can be in the form of a grant or gift.

12. Closing Costs - you will need to be able to pay the closing costs of the FHA loan, which will be higher than a standard loan. Usually, you will need an additional 2.5% of the value of the property