April 1, 2014
A reader asks, “If my credit score is a 630 and were first time homebuyers can we qualify? And would a downpayment help?”
The FHA loan FICO score requirement may vary from lender to lender, but in general a score above 620 may be very helpful when it comes to getting an FHA mortgage loan approved. However, this reader question raises an issue–a popular misconception about FHA mortgages–that’s important to address.
FHA mortgage loans don’t require the applicant to be a first time home buyer. With that in mind the borrower should also know that there’s no “advantage” to being a first time home buyer when it’s time to apply for the FHA mortgage.
That does not mean there aren’t home buyer assistance programs, pre-purchase counseling, or other programs available for those who are purchasing a home for the first time. But these programs are usually offered at the local, city, or statewide level and are not administered by the FHA.
If you need assistance as a first time home buyer, you can contact the FHA directly (1-800 CALL FHA) to request a referral to a HUD approved housing counseling agency in your local area who can help.
The other issue raised by this reader question involves down payments on the FHA mortgage loan. The FHA program requires a down payment–it is not optional. In general, borrowers must be prepared to bring a minimum of 3.5% of the loan. Borrowers are free to pay more than this without penalty but there is no such thing as a zero down payment FHA mortgage loan.
Some of the confusion about FHA loans may stem from the fact that one type of government-backed home loan does feature a no downpayment option, but these are for veterans and are administered through the Department of Veterans Affaris’ VA Loans program. VA mortgage loans are not available to non-veterans.
Do you have questions about FHA home loans? Ask us in the comments section. You can apply or get pre-approved for an FHA loan at FHA.com, a private company and not a government website.
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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