August 27, 2018
If you are interested in buying a home with an FHA mortgage, there are four basic questions you should ask a participating lender when you shop around for the best terms and conditions for your loan. It pays to compare lenders, and it also pays to compare the requirements and costs of your FHA mortgage with conventional equivalents to see where the FHA mortgage will be an advantage to you.
#4. How Much Down Payment Is Required Based On My FICO Scores And Credit History?
Ask a loan officer to give you the down payment requirements for both a conventional loan and an FHA mortgage loan on the same property or price range. If you do not have a specific sale price in hand when you ask, be prepared for an estimate only.
But that estimate will go a long way toward telling you what you need to know about committing to an FHA mortgage. If a conventional loan requires a substantially higher down payment, and your needs are to keep your up-front costs lower, the FHA mortgage loan may be a better choice.
Remember that the down payment requirement for your new home will depend on several factors but FICO scores are among the first and most important when determining what percentage of the adjusted value of the home is required to be paid up front.
#3. What Is The Lender’s FICO Score Requirements For The Lowest Down Payment?
FHA loan rules specify that FICO scores 580 or higher qualify for maximum financing. But lender requirements may be more strict than this and you will need to discuss the lender’s standards rather than assume that FHA loan minimums apply. Don’t make the mistake of budgeting for your down payment without asking the lender if your FICO scores qualify for the lowest money down.
2. What Are My Home Loan Options?
Not all lenders offer the same mortgage loan options. Some might not choose to offer construction loans, mobile home loans, or other types of mortgages technically available under the FHA loan program. You will need to find out what mortgages are open to you at a given lender and make choices about sticking with that lender or moving on to one that can better suit your needs.
1. What Are The Lender’s Credit Standards?
Some borrowers are worried about carrying too much revolving debt, missed payments in the past or credit mistakes. Do you know how your chosen financial institution views these issues or how long you may be required to wait after a missed payment in the last 12 months before you can more safely apply for the FHA loan without worry that these issues may jeopardize your chances at buying a home?
FHA loan guidelines include minimum requirements, but state law and lender rules will also apply. Some borrowers may find it best to wait a few extra months to allow missed payments or other problems to fall out of the 12-month window leading up to the loan application.
This can be a very good idea-for best results come to the FHA loan application process without any late or missed payments in the 12 months leading up to your 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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