FHA Home Loans for First Time Home Buyers
Buying your first home? The first item on your checklist might be home financing and this is where most buyers feel they are treading on unknown waters. Don’t worry, we can help you find the home loans best suited to your need and budget.
Having helped millions of people become homeowners since 1934, FHA home loans are an excellent option for first-time home buyers. With flexible credit guidelines, low down payment, and closing costs, FHA home loans for first time home buyers might be just what you need. Wish to know more? In this section, we’ll explore the benefits and various other aspects of FHA home loans for first time home buyers.
FHA Home Loan Requirements
Even though the Federal Housing Authority does not have stringent qualifying requirements, the lenders offering you the financing can ask you to qualify for some basic requirements. Some lenders stick to stricter guidelines but the basic qualifying factors are as follows:
- The borrower needs to have a minimum credit score of 580 and should pay a down payment of 3.5%. For those having credit scores between 500 and 579, they have to pay 10% down payment.
- The basic 3.5% down payment should come from an acceptable source and this includes your own savings, gift funds, etc. Gift funds from people benefiting from the transaction will not be accepted.
- The borrower will need to provide the documents of income. These include:
- Copies of pay stubs for the past 30 days
- Copies of W-2 forms or 1099 forms of the past 2 years
- Complete tax returns documents
- The bank statements and investment account statements for the past 2 months
- Identification documents like driver’s license, passport, etc.
- If the borrower is self employed, he will need to submit year-to-date profit and loss statements
- The borrowers must be clear of CAIVRS. This is a Credit Alert Interactive Verification Reporting System owned by the government and has a database of people who have defaulted on government loan programs, owe taxes or have federal debt.
- FHA home loans are available for buying a primary residence. You cannot buy a vacation home or a second home.
Minimum Property Standards for FHA Home Loans
The property serves as collateral for the lender, so that if any borrower defaults or stops making payments, the lender would compensate his losses from that specific property. This is the reason why the FHA requires the properties to meet minimum standards so that risks can be minimized. The following are the minimum standards that the properties eligible for FHA loans should meet:
- Safety and Security of the Home: The home should be safe enough to protect the occupants from various perils and it should also promote healthy living for the people living in it. The home should be secured enough to protect the belongings of the family members.
- Soundness: The property should be well built so that there are no issues with the structural integrity. In simple words, the property should be strong enough so that there is no risk for the occupants.
FHA requires appraisal of the properties to be done by FHA approved appraisers, so that they are able to assess the conditions accurately. The good news is, most of the property types are eligible for financing through FHA if they meet the minimum standards.
The qualification process is very easy and similar to any conventional loan program. You need to apply for FHA home loans and submit all the required documents. The lender would evaluate the documents and check whether you are eligible for FHA home loans. Once you clear the initial stage, you will be eligible to get the funds through the approved lender.
To know more about FHA home loans for first time home buyers, you can call us or email us.