We currently offer FHA fixed-rate loans for borrowers with credit scores as low as 580, but 620 and above is recommended for better rates and flexibility for borrowers.
Here is the breakdown for FHA Loans: Credit score: 580 and above but optimal buyers are 620-680. Down Payment: 3.5% down DTI: Below 620: 45% cap. Above 620: 50% cap Term(s): Fixed rate loans, available terms up to 30 years Cash Reserves: Depends on risk assessment. Reserves are equal to your liquid assets like savings or investments minus the cash required at closing. Typically 1-3 months of your housing expense (Principal, Interest, Tax, Insurance & Association) but sometimes more is needed to offset certain risk factors. Seller Concessions: Up to 6% of the loan amount!
Mortgage Insurance: Yes, lifetime PMI will be added to the monthly payment but is generally much less expensive than conventional product under 680 credit score. The amount varies from lender to lender. There is also an up-front mortgage insurance premium that can be paid at closing or financed as part of the loan, typically around 1.75% of the loan amount. You have the option to refinance to a conventional product, once the loan-to-value has dropped below 80%, to remove PMI. Appraisals: FHA loans are subject to HUD appraisals and require higher standards for the health and safety of a property, but this shouldn't discourage buyers or sellers especially if there are no health and safety issues with the house. If you have any specific questions or would like a copy of the FHA handbook, you can download it here: www.hud.gov/sites/documents/40001HSGH.pdf
If you think you're ready...
Fill out a brief questionnaire and we'll give you a free affordability analysis! We will contact you with the results within 24 hours and help you determine whether you're ready to get pre-approved to purchase a home!