Everything You Need To Know About FHA Mortgages
Are you looking to buy a home and searching “What is an FHA mortgage?” As the trusted mortgage lenders in Tucson, AZ, Altitude Home Loans is happy to determine whether you qualify and help you fill out all the paperwork. Learn everything you should know to give yourself the best chance of obtaining these government-backed mortgage benefits.
How FHA Mortgages Differ From Traditional Home Loans
A loan from the Federal Housing Administration has lower requirements and better terms. Though they’re popular among first-time homebuyers, other situations can qualify for FHA loan eligibility.
Take Advantage of Flexible Qualifying Guidelines
Want to buy a home but have a difficult financial situation? You’ll appreciate the lower FHA loan requirements, which include:
- You must purchase the home as your primary residence.
- The family must move in within 60 days of closing.
- An appraiser must find that the home meets safety and livability standards.
- You must have a credit score of at least 500.
- You can use a down payment as low as 3.5% if you have a credit score over 580.
- Borrowers must have at least two years of consistent employment, study, or military service.
- Most lenders prefer a debt-to-income ratio under 50% and no delinquent debts.
- Single-unit homes can have a maximum value of about $500,000 in low-cost areas or $1,200,000 in high-cost cities.
Benefit From Assistance Programs and Fewer Penalties
One aspect that many other first-time homebuyer FHA guides forget to mention is the ability to combine these loans with other programs. For example, you can combine them with down payment assistance or gifts accompanied by an official letter. You also won’t incur any penalties if you pay off the mortgage early.
Best Tips for Applying for a Mortgage From the Federal Housing Administration
What is an FHA mortgage? If you want to apply for this government-backed home loan, use the following tips to give yourself the best chance of success.
Organize All Your Documents Before Applying
Gather the following documents so you can apply quickly:
- Government-issued ID
- Social Security Number
- Two years’ worth of W-2s or bank statements
- Option proof-of-gift letters
Work on Increasing Your Credit Score
While you can have a lower credit score, try to increase it to 580. Below that score, you’ll need a 10% down payment and have higher interest rates. If you’re already above 580, you’re on your way to obtaining this low down payment home loan.
Pay Off Smaller Debts To Lower DTI Ratio
Aim for a debt-to-income ratio below 43%. You likely can’t pay off student or car loans but try eliminating some of your smaller debts. For example, if you have a credit card with a balance of $1,000, paying it off could help you save money in the long term on better loan conditions.
Find Your Next Mortgage With Help From Altitude Home Loans
What is an FHA mortgage? At Altitude Home Loans, we take the time to answer this question and more. Our expert loan officers help you avoid first-time homebuyer mistakes and work hard to find you the best rates.
To start your application process, call 520-500-1010.