May 12, 2015
A reader asks, “I have a few General but direct questions about FHA loans or ability to borrow & income status . In my case I have about an income range of 88k- 100k…My Fico Score is presently from 586-597; due to go up to 620 very shortly. My debt to income ratio is in the 25% range or so…Based on that information alone, how much max Loan I could get from FHA loan putting at least 3.5% down 0r 10% down on a house worth 395k or/and 270k.”
FHA loan rules do permit lenders to approve a home loan for borrowers with FICO scores in the range mentioned in the reader question, but lender standards also apply.
A potential FHA loan applicant should know many lenders are looking for FICO scores at 620 or better in many cases. That is not to say that NO lender will work with a borrower with FICO scores below 620, but it may be necessary to look harder for a lender that will in such cases. Loan repayment history and other financial qualifications will also factor into the loan approval decision.
FHA loan amounts are based on the appraised value of a given property and the maximum amount the FHA will guaranty depends on the location of the home. FHA maximum loan guaranty amounts vary from zip code to zip code depending on the market. An FHA loan guaranty limit is not necessarily the final amount possible on an FHA mortgage–borrowers may be able to apply for larger loans depending on the lender and financial qualifications.
However, new purchase loans do not permit cash back to the borrower, so any larger loan amount would be for the purchase and financing of approved costs–no cash back will be permitted except in the form of a genuine refund for money paid up front for expenses financed later.
Your FHA home loan amount will depend greatly on an appraisal; the lower of the two numbers between the asking price and the appraisal will determine the base loan amount. Speak to a loan officer to determine what may be possible for amounts above and beyond that amount as lender standards will vary.
Do you have questions about FHA loans? Ask us in the comments section.
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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