An FHA loan is a type of mortgage specifically designed to assist low-to-middle income borrowers. FHA loans are particularly attractive with first-time homebuyers because they typically require a lower down payment and most lenders are somewhat flexible in terms of credit score. However, FHA loans aren’t a guaranteed path to home ownership.
Not everyone qualifies or can benefit from an FHA loan, but if you’re thinking about applying for one, it’s important to know the minimum requirements. According to the FHA Handbook, individuals who hope to apply for an FHA loan must:
- Be able to make a down payment of at least 3.5% of the property’s value
- Have a manageable level of debt
- Possess a steady job with an income that’s sufficient enough to make your monthly mortgage payment
- Have decent or good credit
So, what’s considered decent or good credit?
The United States Department of Housing and Urban Development (HUD) says applicants must have a minimum credit score of at least 500, but lenders have the final say. What’s more, most won’t approve an FHA loan for applicants with a credit score that’s lower than 600, so if yours is on the borderline, you’ll want to try to raise it prior to applying.
This isn’t a comprehensive overview of FHA loans, but it does provide a few key insights. If you have further questions or are wondering what type of mortgage you’ll most benefit from, we encourage you to get in touch. Walk in during our normal business hours or call (801) 692-0077 and request an appointment today.