Professional Mortgage Solutions in Rego Park, NY supports many clients in buying their first home with an FHA Loan. Also known as an “FHA-Insured Loan,” these mortgages are insured by the Federal Housing Administration. The insurance protects lenders in case the borrower defaults. The FHA loan is designed with new homeowners in mind, and features low down payment options and less stringent screening requirements. This way, a potential homebuyer can focus on obtainable goals when saving to purchase a new home.
Qualifying for an FHA Loan
In order to qualify for an FHA Loan, expect to save at least 3.5% of the home purchase price for a down payment. In addition, you may not be approved if you have a low credit score. Make sure you also have any payments with the federal government current, such as your taxes owed or your student loans. The home you purchase will also have to qualify for an FHA loan through an inspection. FHA Loans require that you have mortgage insurance, which you can finance into your monthly loan payments.
Here are some of the documents required when you go to apply for an FHA Loan:
- At least two years of W-2, 1099, or other income statements;
- At least two years of tax return statements;
- Adequate documentation of your current income;
- If you are Self-employed, then you will need three years of tax returns and a year-to-date profit/loss statement.
Basic Eligibility Requirements for an FHA Loan
In addition to having the basic documentation, you should understand how to meet the particular eligibility requirements for an FHA Loan. Things you will need in order to qualify include:
- A down payment savings of at least three percent from an eligible source, such as your own savings account or a gift, though the gift cannot come from someone who will benefit financially from the sale of the home.
- A credit score of 580 or higher, though if you save for a higher down payment, a lower credit score may be accepted.
- A clear history from Credit Alert Interactive Verification Reporting System (CAIVRS) which helps show that you do not owe other government debt.
- The home you purchase must also be your primary residence, or the primary residence of a family member.
If you have decent documentation of income, and a good credit score, you may save more money if you opt for an FHA Loan over another type of loan. Even if your credit is not great, you may still achieve the dream of home ownership faster through this program for young homebuyers. If you want to learn more, or have questions about FHA Loans, contact Professional Mortgage Solutions in Rego Park, NY. We are happy to answer any questions you may have!