How do FHA mortgages work and what are the minimum qualifications?

Posted on Aug 22, 2012 in FHA Information

Question by Jeremy M: How do FHA mortgages work and what are the minimum qualifications?

Best answer:

Answer by Yo
FHAs are not credit driven and they mostly focus on income. You can only get a house for a certain price depending on the region where you are.

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  1. A site at has free consumer information on home loans for first time home buyers.

  2. FHA Mortgages “were” designed for people that originally could not be approved for a conventional mortgage.

    FHA Minimum qualifications …

    3% Down Payment Required – This does not have to come from your funds. This can be a gift. Also, you should check into down payment grant programs. I use the (seller participation is required), but it alleviates the need for the 3%.

    Debt-to-income ratios – 29/41 This means that total mortgage payment must be equal to or less than 29% of your gross income. And your total mortgage payment plus all minimum payments required (on your credit report) must be equal to or less than 41%. Now, these types of loan go through an automated underwriting system. If the system approves you with higher ratios, then fine. But these are the guidelines.

    Credit Scores/Credit – FHA does not require a minimum credit score. Lenders do. For example, even though FHA did not specify a credit score, we imposed a minimum 550. Later to get to a more true FHA guideline, this was lowered to 500. If you don’t have credit and no score, alternative credit can be used to build a credit history (ie 12 months of telephone bills, car insurance, cell phone bills etc)

    There are no income restrictions with FHA – You could make as much as you want.

    There are loan amount restrictions and it is based on the county you live in. Go to this is FHA’s website and you can look up your county, state etc to see what the max loan can be.

    Property restrictions – No real property restrictions unless you are buying a manufactured home which will require certain details (ie >400sf, on its own land, permanently attached to foundation etc)

    Visit my blog for other information or contact me and I can answer more specific questions. (all informational, no solicitation) I like to help that’s all.