A lack of credit and hefty down payment shouldn’t hold you back from your dream of becoming a homeowner. FHA financing was created as an alternative to conventional financing and offers homebuyers more flexible guidelines and lower down payment options. FHA Loan benefits include:
Low 3.5% down payment
Gift funds are acceptable for down payment and closing costs
More flexible credit requirements
Fixed-rate and adjustable-rate mortgages available
Sellers can help with closing costs
Find out more about FHA Loans and eligibility from your Assurance Financial Loan Officer.
We’ve created these guides to be a valuable resource to walk you step-by-step through your next adventure.
You may have a dream of owning your own home, but if you have had financial challenges in the past, you may assume you do not qualify for a mortgage. FHA loans may be one way to get a second financial chance and to reap the benefits of homeownership.
What Credit Score Is Needed for an FHA Loan?
You may be able to get a loan with a credit score of at least 580 if you have a down payment of 3.5%. You may even qualify for an FHA mortgage with a credit score of 500 to 579 if you can make a down payment of 10% of the asking price.
The exact credit score you need will depend on the length of your credit history, your employment history, the home you are trying to purchase, your assets, your down payment, and other factors.
No one number ensures a mortgage. For this reason, you may wish to reach out to the mortgage experts at Assurance Financial. We don’t make it about numbers. Instead, we discuss your entire situation and help you find options and solutions. We’re The People People when it comes to home loans because we put you first.
Where Can I Get an FHA Loan?
Many lenders offering government-secured loans offer FHA loans. Assurance Financial offers a range of home loan products and is one place you can go if you have been wondering where to get an FHA loan. The FHA does not offer mortgages — you still need to work with an approved lender to get this type of financing.
How to Apply for an FHA Loan Online
You apply for an FHA loan the same way you might apply for most mortgages. At Assurance Financial, you can apply online or by speaking with a local loan officer. As with any loan, you must show you have the credit score needed for the loan, the money for the down payment, and proof of income.
In addition, there are further FHA loan application requirements. For example, your down payment must come from savings, a down payment grant, or a gift from family.
How Do I Qualify for an FHA Loan?
To get an FHA loan, you must meet some requirements:
- You must pay mortgage insurance: FHA mortgages require you to pay Upfront Mortgage Insurance Premium (UFMIP) and an annual MIP. Your UFMIP can be rolled into your mortgage or paid during closing while the Annual MIP is paid each month.
- You must work with an FHA-approved lender: A lender like Assurance Financial is qualified to offer you a home loan and can walk you through the application process.
- You must have steady work: Since FHA mortgages rely less on stellar credit, lenders place more emphasis on employment. You may need to show you have worked with your current employer for at least two years or that your employment history is steady.
- You must be purchasing a home: FHA loans are not intended for investment properties.
- Your home must be approved: You need an appraisal from an FHA-approved appraiser, and your home must meet certain requirements.
- Your loan must meet certain limits: You can only use this type of financing to cover about 115% of the median home price for your county. The FHA publishes the limits for each area, so you can see how much of a home loan you may qualify for.
- Your home must be your primary residence: To get an FHA loan, you must be purchasing a home that will be used as your primary residence.
Once you’ve purchased a home with an FHA loan, you have an important asset in your home’s equity, which refers to the value of your home minus any debts or liens on the property. Over time, your home’s equity grows as you improve the house and as you pay down your home loan.
Let’s say you apply for an FHA loan online and use this loan to purchase a $100,000 fixer-upper home. Your mortgage is $90,000. Over the course of a few years, you pay down your mortgage so that it’s only $85,000. You also improve the home so that it’s worth $150,000. Your equity in the property is $65,000 — that is, $150,000 minus $85,000.
You can borrow against this amount with a Home Equity Line of Credit (HELOC) if you wish. This equity will also improve your net worth and provide you with an asset. If you ever sell your home, its equity will let you enjoy a potential profit. One of the benefits you’ll have as a homeowner is your ability to grow equity, and an FHA home loan can allow you to enjoy this advantage.
Debt to Income Ratio
If you’d like to apply for an FHA loan online or in person, your lender will consider, among other things, your debt to income ratio. This ratio is used to make sure the first-time homebuyer or any homebuyer is in the position to pay for all the expenses related to a home loan and homeownership.
The FHA actually looks at two ratios — your total debt to income ratio and the debt to income ratio for the house. To calculate the ratio for the house, take the total mortgage costs per month, including principal, interest, insurance, homeowners’ dues, and other expenses, and divide the total cost by the gross monthly income of the homebuyers. The FHA wants a ratio of no more than 31%.
In addition, you’ll want to tally up the total costs of the mortgage per month and add in the total costs of any monthly debt payments, including student loans, credit card payments, car financing, personal loans, and other financing, and divide this number by your gross monthly income. The FHA seeks a ratio of no more than 43%.
These ratios are only part of the equation, so even if you’re not sure your ratios qualify you for a loan, you may want to speak to the advisors at Assurance Financial to see whether you qualify for an FHA loan or another type of mortgage.
Use Our FHA Loan Calculator
If you’re curious whether an FHA loan may be right for you, use the Assurance Financial FHA loan calculator to see how much you could pay and save with this type of home loan.
Our FHA Loan Approval Process
Assurance Financial understands you may have questions when you decide to buy a home. You may wonder, “Where is there an FHA loan officer near me?” or “Is an FHA loan or another mortgage the right option for my situation?”
Fortunately, Assurance Financial makes it easy to get answers. You can apply online for your mortgage with Abby, your virtual assistant, in just minutes. You can also contact a local loan officer to get more information. Once we look at your credit and application, we can give you a free quote and pre-qualification, so you can understand how much your home may cost. This process also allows you to understand whether you qualify for a home loan.
Once you are ready to apply and decide an FHA loan is right for you, Assurance Financial can walk you through the whole application process:
- Submit documentation: You may need to submit documentation, and you will need to find a property to buy before completing this step.
- Wait for in-house processing: Once we have your application, we take care of processing in-house. The processing stage involves underwriting, appraisal, and approval.
- Receive funding: Finally, we are able to move to funding once you have been approved. You will sign with a notary to close your loan, and we will fund your loan. At this point, you may be able to start getting ready to move in.
At every stage, Assurance Financial works to keep the process smooth and easy to understand. If you ever have questions, your mortgage expert is there to help.
Trusted FHA Loan Officers
Assurance Financial has FHA-approved loan officers, but we also have much more. We pride ourselves on being The People People. We don’t just focus on numbers — our experts get to know you and help you find the right home loan for your situation. We answer your questions and stay responsive.
Assurance Financial also uses the most current application technology to allow you to apply online or with a real person quickly and easily. Abby, your virtual assistant, can walk you through the application process online so you can get your free quote. You don’t even have to fax over your paperwork since Abby can guide you to log into your bank account and payroll information to confirm your financial details.
FHA Loan Frequently Asked Questions (FAQs)
Below are some of the most frequently asked questions we receive from our customers about FHA loans:
What Is an FHA Loan?
An FHA loan is an FHA-insured mortgage. This means the government agency known as the Federal Housing Administration (FHA) will back the loan. FHA mortgages accept a lower minimum credit score and down payment than conventional loans, and they are provided by FHA-approved mortgage lenders rather than by the FHA itself.
How Do I Apply for an FHA Home Loan?
You can apply for an FHA mortgage online with Abby, your virtual assistant, in under 15 minutes. Before you apply, be sure you know your budget and consider your income, savings, and expenses when you are determining how much home you can afford.
To apply for an FHA mortgage and get friendly, expert-level help during the mortgage process, go online with Abby to get pre-qualified and receive a free, no-obligation quote. Or contact a local loan officer to speak to someone directly about your homeownership goals.
Who Can Apply for an FHA Loan?
People who do not have perfect credit, have filed for bankruptcy in the past, or new homebuyers who are still working on their finances should consider an FHA loan. In cases where you may not qualify for a traditional loan, FHA financing may be right for you.
FHA loans may be a good match for new homebuyers who may still be working on their financial picture. Those who have been renting and dreaming of buying a home sometimes hesitate because their credit is not perfect or because it’s hard to save up 20% of the down payment of a home.
Fortunately, the more relaxed requirements of an FHA loan mean that more people can enjoy the American dream of buying their own property. FHA loans are available for properties with one to four units.
If you’re not sure whether this type of home loan is a match for your plans, speak to FHA loan lenders at Assurance Financial. We can explore your options together.
What Are the FHA Loan Requirements?
To get an FHA loan, you must pay mortgage insurance, work with an FHA-approved lender, have steady work, be purchasing a home that you will be using as your primary residence and be approved.
Can I Get an FHA Loan Without a Job?
You can get an FHA loan during a job gap, but you must have proof of steady income.
How Much Can I Qualify For?
The amount you qualify for depends on your income, down payment, credit score, and other factors. Use the Assurance Financial loan calculator to see how much you qualify for.
Can I Have a Co-Borrower for an FHA Loan?
Yes, the FHA allows a co-borrower or co-signer to also apply alongside you.
How Long Does It Take for FHA Loan Approval?
A lender must take action on your FHA loan application and inform you of the action within 30 days after you complete and submit your application. Your application needs to be totally complete before the 30-day period will begin. This means you should ensure that you have submitted all of the requested information and material to your lender.
Who Approves FHA Loans?
Your loan application will be processed and approved by your FHA-approved lender. Assurance Financial takes care of processing in-house to ensure the process is smooth and easy to understand.
Are FHA Loans Just for First-Time Buyers?
No. The relaxed requirements of an FHA loan mean first-time and repeat buyers can enjoy buying their own property with this loan type. Though not only for first-time homebuyers, FHA loans are popular among this group because of the lower barriers for approval, including a lower credit score and down payment.
Can You Get an FHA Loan With Bad Credit?
The exact credit score you need depends on the length of your credit history, employment history, the home you’re trying to purchase, and more. You may be able to get a loan with a credit score of at least 580, or you can work towards building up your credit score before applying.
Can You Get an FHA Loan for Investment Property?
No. FHA loans are not intended for investment properties.
Can I Get a Second FHA Mortgage?
Generally, borrowers can only have one FHA mortgage at a time.
Should I Get Pre-Qualified Before Looking for an FHA Loan?
It’s a good idea to get pre-qualified and pre-approved for an FHA loan online before you start house hunting to identify your price range:
- Pre-qualification: Pre-qualification for an FHA loan means the lender is willing to offer you a certain amount of money for the purchase of a home. Though this doesn’t guarantee a mortgage, pre-qualification can give you a maximum loan amount that you can expect to receive.
- Pre-approval: A lender will base pre-approval on an analysis of your finances, and this analysis gives you a hard number for a mortgage loan amount. After the lender reviews your completed application and conducts a credit check, you can get pre-approved.
Getting pre-qualified is a valuable part of the homebuying process, as it gives you a budget to work with, makes your offer more attractive to a seller, gives you leverage over other potential buyers, and saves you time when you are ready to finalize the mortgage. At Assurance Financial, we can give you a free quote and pre-qualification.
Is the Inspection Process Different for FHA Loans?
FHA home inspections look for hazards, structural issues and make sure the home meets the FHA property standards.
What Is the Difference Between FHA and Conventional Loans?
FHA loans are insured by the federal government, whereas conventional loans are not. FHA and conventional loans also differ in refinancing, loan limits, and owner-occupation requirements:
- Refinancing: While available for both loan types, refinancing is more detailed for a conventional loan and requires an appraisal, credit check, and income verification.
- Loan limits: Both loan types have maximum and minimum amounts you can receive, but they differ in how these limits are determined. The limits for an FHA loan are determined by the county’s median home value, and conventional loans follow the protection standards under Fannie Mae and Freddie Mac.
- Owner occupation: While an FHA loan requires you to live in the property, a conventional loan does not.
Can I Refinance an FHA Loan?
Yes. You can refinance an FHA loan to reduce or eliminate mortgage insurance, increase the size of your loan, reduce or change your interest rate or reduce your monthly payment.
Secure Your FHA Loan With Assurance Financial