preapp

The FHA Mortgage is one of the more easier loans to qualify for when selecting a home. Therefore the requirements of an FHA Mortgage are the basic standard of guidelines to obtain a Mortgage for a home.

You must generally meet these requirements to obtain a Home Loan from a bank. I start with these below to give Buyers an idea of what to have together as far as requirements to be able to acquire a Home Mortgage. These are the Basic requirements of an FHA Mortgage brought to you by FHA.com.

 

FHA Basic Application Checklist

  • Address to your place of residence (past two years)
  • Social Security numbers
  • Names and location of your employers (past two years)
  • Gross monthly salary at your current job(s)
  • Pertinent information for all checking and savings accounts
  • Pertinent information for all open loans
  • Complete information for other real estate you own
  • Approximate value of all personal property
  • Certificate of Eligibility and DD-214 (for veterans only)
  • Current check stubs and your W-2 forms (past two years)
  • Personal tax returns (past two years), current income statement and business balance sheet for self-employed individuals

In addition, you will need to pay for a credit report and appraisal of the property.

Income Requirements

In order to prevent home buyers from getting into a home they cannot afford, FHA requirements and guidelines have been set in place requiring borrowers and/or their spouse to qualify according to set debt to income ratios. These ratios are used to calculate whether or not the potential borrower is in a financial position that would allow them to meet the demands that are often included in owning a home.

The two ratios are as follows:

1) Mortgage Payment Expense to Effective Income

Add up the total mortgage payment (principal and interest, escrow deposits for taxes, hazard insurance, mortgage insurance premium, homeowners’ dues, etc.). Then, take that amount and divide it by the gross monthly income. The maximum ratio to qualify is 31%.

See the following example:

Total amount of new house payment:
$750

Borrower’s gross monthly income (including spouse, if married):
$2,850

Divide total house payment by gross monthly income:
$750/$2,850

Debt to income ratio:
26.32%



2) Total Fixed Payment to Effective Income

Add up the total mortgage payment (principal and interest, escrow deposits for taxes, hazard insurance, mortgage insurance premium, homeowners’ dues, etc.) and all recurring monthly revolving and installment debt (car loans, personal loans, student loans, credit cards, etc.). Then, take that amount and divide it by the gross monthly income. The maximum ratio to qualify is 43%.

See the following example:

Total amount of new house payment:
$750

Total amount of monthly recurring debt:
$400

Total amount of monthly debt:
$1,150

Borrower’s gross monthly income (including spouse, if married)
$2,850

Divide total monthly debt by gross monthly income:
$1,150/$2,850

Debt to income ratio:
40.35%

Please note that the above indicators do not exclusively determine whether or not a candidate will qualify for an FHA loan. Other factors will be considered, including credit history and job stability.

Read the Entire Article Here at FHA.com