Income
There are no guidelines for salary, but each lender will have their own rules for income. Debt-to-income ratio is the key.
You do need two years of employment in the same line of work, however we have lenders that will waive this requirement if you move to a new line of work and the guaranteed pay is better!
Credit
You will need at least two open lines of credit in good standing. Examples are credit cards, auto loans, and installment loans.
We have the ability to add non-traditional credit lines to meet this requirement. Examples include utilities, cell phone, rent, etc.
Late payments can be overlooked!
Down payment
3.5% down for 580+ FICO
10% down for 500-579 FICO
At credit scores of 500, your loan officer should carefully discuss your options with you.
A factor in the decision making process is whether a larger down payment for a higher interest rate loan makes sense vs. waiting for your credit history to improve. It all depends on your financial picture and housing needs, as well as ability to refinance down the road.
You need an experienced loan officer who truly understands credit to guide you.
Mortgage Insurance Premium (MIP)
There are two types of mortgage insurance you will pay:
The first is a one-time up front premium which is usually rolled into the loan. Up-front MIP is 1.75% for all purchases.
Annual mortgage premium (MIP) is usually for the life of the loan, but certain circumstances allow it to
be cancelled after 11 years.
Annual MIP for FHA loans under $625,500
For 30 year fixed rate loans, MIP can range from 0.80% to 0.85% depending on the down payment.
For 15 year fixed rate loans, Annual MIP can range from 0.45% to 0.70% depending on the down
payment.
Annual MIP for FHA loans above $625,500
For 30 year fixed rate loans, Annual MIP can range from 1.0% to 1.05% depending on the down payment.
For 15 year fixed rate loans, Annual MIP can range from 0.45% to 0.95% depending on the down payment.
Bankruptcies
Chapter 13 bankruptcy may be okay as long as payments have been made on time for 1 year. Other factors will apply.
Chapter 7 bankruptcy must be discharged at least 2 years.
Foreclosures
No foreclosures within the previous three years.
Collections, judgments, tax liens
Not all collection accounts have to be paid off. Medical collections are not considered.
But judgments must be paid off. Student loans and tax liens that are delinquent will also disqualify you.
Property requirements
- No investment properties are allowed.
- It must be a primary residence with at least one borrower occupying the property.
- It cannot be a flipped property (within 90 days of a prior sale).
- FHA approved appraisers give it a strict inspection.
It is imperative that you work with an experienced loan officer that specializes in this market.
We offer FHA pre-approvals you can count on.
At HP Mortgage LLC, we know our FHA guidelines in and out—that means you will be pre-approved in 5 minutes or less! We are partnered with FHA-approved lenders offering the lowest rates available.
Please give us a call today!
NMLS# 1456273
