January 17, 2018
Who Can Apply For An FHA Mortgage? In our previous blog post we addressed some common misconceptions about FHA mortgages, but there is a long list of FHA home loan uses including refinancing, fixer-upper loans, and much more.
Who can apply for an FHA home loan? You may find your own needs represented somewhere in this list of approved FHA loan uses.
FHA Loans Are For Owner/Occupiers
You can apply to buy a property up to four units, and act as a landlord to rent out the units you won’t be living in; FHA loans have an occupancy requirement so you cannot buy a home with an FHA mortgage unless at least one person obligated on the loan will live there as the primary residence.
FHA Loans Are For U.S. Citizens, Legal Permanent Resident Aliens, and Non-Permanent Resident Aliens
FHA home loans do not require U.S. citizenship for approval. Applicants who are not U.S. citizens will be required to show proof of status, and no FHA loan can be approved for those in the United States illegally.
In all cases, occupancy of the property purchased with the FHA loan is required, and proof of a Social Security Number alone is not sufficient for loan approval. Proof of legal work status may be required; people in the U.S. seeking asylum or who have refugee status won’t be required to show work status, but rather paperwork documenting them as asylees or refugees.
FHA Loans Are For Those Who Want To Buy Homes
Some confuse the FHA home loan program with a broader, personal loan type of transaction. FHA home loans, refinance loans, and reverse mortgages are only for real estate transactions only and specific lending rules apply.
For new purchase/forward mortgage loans, borrowers cannot apply for “more” loan than is required with the intent of getting cash back on the transaction.
Cash back on FHA loans is limited to refunds, except for loans that require escrow to complete repairs, construction, renovation, etc. Cash back is permitted on FHA cash-out refinance loans, and is calculated based on the amount of equity in the home and other factors.
FHA Loans Are For Those Buying “Real Property”
You can apply to get an FHA mortgage or refinance loan to use on a condo, mobile home, town home, or other properties with a permanent foundation that can be classified and taxed as “real property” or real estate.
Recreational vehicles, house boats, and other items that cannot be permanently affixed to an approved foundation cannot be purchased with an FHA home loan or refinanced with one.
FHA Loans Are For Those Who Qualify With FICO Scores, Credit History, and Income
FHA loan minimum standards require a FICO score of 500 or higher to qualify for a loan. FHA lenders may have higher standards, which is permitted. FHA loan rules do not specify minimum or maximum income, but instead requires the lender to examine the borrower’s income versus his or her monthly debts to determine whether the applicant can realistically afford the loan.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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