FHA Loan Guidelines for Borrowers
The Federal Housing Administration (FHA) was created in 1934 to help people overcome the barrier of high down payments so they could purchase homes. The FHA does not actually issue the loans but instead provides insurance to the lenders in case of default.
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Down Payment
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The down payment for FHA loans can be as low as 3.5 percent. Conventional loans usually require a down payment of 10 to 20 percent.
Mortgage Payment to Income Ratio
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Your mortgage payment cannot amount to more than 35 percent of your monthly income in order to qualify for an FHA-backed loan.
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Debt to Income
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Your monthly debt payments including your mortgage payment, auto loans and student loans cannot exceed 41 percent of your monthly income.
Credit History
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You cannot have had a bankruptcy within the past two years or a foreclosure within the past three years. If you have a credit score, it should be at least 580.
Employment
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You need to have been employed consistently over the past two years and be able to show that your current employment position is stable.
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