Because they are government-backed, lenders typically hand these loans out to a wider pool of candidates and they come with competitive interest rates, lower down payments, and more flexible underwriting guidelines.<\/p>\n\n\n\n
In many cases you can get a loan with only a 3.5% down payment and a fixed rate over a 30 year term!<\/p>\n\n\n\n
FHA loans are popular among first-time homebuyers.<\/p>\n\n\n\n
Who Can Qualify for an FHA Loan?<\/h2>\n\n\n\n
The FHA has specifically geared these loans toward low and moderate-income homebuyers with their less stringent requirements.<\/p>\n\n\n\n
Typically, you will need a credit score of at least 500 and a debt-to-income ratio of less than 43% to qualify for an FHA loan. However, even borrowers with no credit history or a history of bankruptcy may be able to qualify. <\/p>\n\n\n\n
Lenders also require that you show proof of steady employment and income.<\/p>\n\n\n\n
FHA Credit Score Requirements<\/h3>\n\n\n\n
FHA credit score requirements are significantly lower than those associated with conventional mortgages. <\/p>\n\n\n\n
You need a FICO score of at least 500 to qualify for an FHA loan, and borrowers with a score of 580 higher are eligible for a low down payment advantage. <\/p>\n\n\n\n
Lenders will also look into your payment history and any previous bankruptcies or foreclosures.<\/p>\n\n\n\n
FHA Debt-to-Income Ratio Limits<\/h3>\n\n\n\n
Your debt-to-income ratio (also called your “DTI ratio”) is the sum of your total monthly payments divided by your monthly income. Your DTI ratio must be lower than 43% in order to qualify for an FHA loan.<\/p>\n\n\n\n
However, there are special circumstances that might grant wiggle room in this department. For example, if you pay a larger down payment, have a high net worth, or have enough savings, you might be able to go slightly above the 43% DTI ratio requirement.<\/p>\n\n\n\n
If want to start house hacking a multi-unit property, you can likely raise your effective income for DTI ratio purposes. That is, lenders will generally factor in the income that the additional units will throw off when calculating your monthly income.<\/p>\n\n\n\n
So you’ll be able to qualify for a bigger loan if the multi-family property will produce income while you live in it. This makes something like an FHA loan an excellent option for house hacking.<\/p>\n\n\n\n Definitely talk with a lender to better understand your options.<\/p>\n\n\n\n With a credit score of 580 or higher, borrowers can qualify for a low down payment advantage of 3.5%. This is much lower than the standard 5%, 10%, or even 20% associated with conventional mortgages. <\/p>\n\n\n\n If your FICO score is between 500 and 579, you can still qualify for an FHA loan with a down payment of at least 10%.<\/p>\n\n\n\n However, the higher you can get your credit score, the better terms you’ll be able to unlock.<\/p>\n\n\n\n FHA loan limits vary depending on the county where you purchase your property and the number of units in the home. <\/p>\n\n\n\n The following chart is provided by the Federal Housing Authority<\/a> and should give you a rough idea of loan limits for various property sizes in low and high-cost areas. <\/p>\n\n\n\n![\"FHA](\"https:\/\/househackhelp.com\/wp-content\/uploads\/2022\/06\/approved-g97a854447_1920-1024x681.webp\")
<\/figure>\n\n\n\nFHA Down Payment Requirements<\/h3>\n\n\n\n
FHA Loan Limits<\/h3>\n\n\n\n
![\"mortgage\"](\"https:\/\/househackhelp.com\/wp-content\/uploads\/2022\/05\/mortgage-signing-1-1024x683.webp\")
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