An FHA loan, or Federal Housing Administration Loan, is generally used to help persons with moderate or low incomes acquire mortgages. However, unless you are a real estate or financial professional, this process can seem confusing, and will probably raise a number of questions. Read on to have some of your questions about FHA loans cleared up.
What Is an FHA Loan?
An FHA loan is a mortgage loan that is issued by federally qualified lenders and is insured by the Federal Housing Administration. These loans are designed specifically for low to moderate income borrowers who cannot make the large down payment which traditional loans require. An FHA loan allows people to borrow up to 97% of the value of the home they are purchasing. The remaining 3% can come from either a gift or a grant, which makes this type of loan popular with first time home buyers.
Do I Qualify for an FHA Loan?
In order to know whether you qualify for an FHA loan, you will need some information to apply. These pieces of information include:
- Your social security number
- Your addresses of the past two years
- Your gross monthly salary at your present job
- The locations and names of your employers for the past two years
- Complete information regarding any other estates you currently own
- Pertinent information for all of your checking and savings accounts
- If you are a veteran, your Certificate of Eligibility and DD-214
- An approximate value of all your personal property
- Recent check stubs and your W-2 forms from the past two years
- Your personal tax returns for the previous two years
- Your current income statement and business balance sheet if you are currently self-employed
What Are The Credit Requirements For A Loan?
Before you are approved for an FHA loan, your FHA lender will need to take a look at your past credit performance. Generally, being approved for an FHA loan requires a minimum credit score of at least 500, though anything below 620 is considered to be subprime. If you have a low credit score you are at risk of being denied an FHA loan, though it is not guaranteed.
Get In Touch With Clagett Enterprises Today
At Clagett Enterprises, we have extensive experience serving the greater Frederick area and Western Maryland, since 1987. Our team is a full-service real estate company that’s ready to help you with your real estate and residential sales needs. Speak with a Clagett professional at 301-665-6009, or request a proposal for preventive maintenance here.