Know about the FHA Loan Requirements in Houston before Start Planning Home Purchase

Are you wondering whether there are any requirements imposed for an FHA loan in Texas? Read the article to know more.

 

 

Did you know the government backs the FHA loan to let you buy a house with a bad credit score? If you have had a history of bankruptcy or foreclosure, the loan can be a great option in your life. Federal Housing Administration insures the FHA loan and the lenders are protected against loss when a borrower defaults on the mortgage. Whether you are buying a single-family or multi-family unit, the FHA loan is a great savior for every type of borrower. Since 1934, the loan has become the best friend for millions of borrowers across the United States. Before you become determined to choose the mortgage, you should learn about the requirements.

FHA loan came to existence during the time of the Great Depression when the rate of foreclosure went up. To stir the housing market, the government came up with a federally insured loan to keep the lender’s risk down. Of course, the mortgage appeared to make things a lot easier for the borrowers as well. If you pass the FHA loan requirements Texas, you can secure a house with less worry.  For example, you need not worry about the credit score frantically. So, what are the requirements that you must keep in mind? Go through the rest of the article to know about the loan requirements in Texas.

Know about the Income Criteria

There is no particular requirement for qualifying an FHA mortgage. If you have been a steady employee for more than two years, you are good to go. Before applying for the loan, you should submit the tax returns, W-2s, bank statements, and pay stubs. If your lender asks for other examples for verification, you should consider that as well.

Know How much You should Put down

Down payment refers to a certain amount for the purchase price and the upfront money which you are willing to put down. The minimum amount of down payment that you are willing to make on a mortgage is related to the credit score. For an FHA mortgage, you should have at least a 3.5% down payment against the credit score of 580 or above. If you can make a 10% down payment, you must have a 500 to 579 credit score. You can utilize a mortgage calculator to estimate the down payment. It is better to know how the down payment affects your monthly payment.

Learn about the Interest Rates

The conventional mortgage is competitive in comparison to conventional loans. As the government backs the mortgage, it lowers down the risk a borrower poses. In return, a lender can offer lower rates. The rate is based on different factors involving the income, borrowing amount, debt-to-income ratio, and down payment amount.

The mortgage further poses certain requirements for the bankruptcy. You need to re-establish the credit score before passing the eligibility criteria. The lenders also fix the FHA loan rules and you should have a thorough discussion with them before everything. Your score needs to be free from late payments as well. So, get in touch with a professional lender.

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