In an ever changing and uncertain landscape in the housing market since the Presidential Elections in November, there are still reasons to keep purchasing homes because quite frankly, even if mortgage rates are on the rise, borrowers are still going to need to purchase homes regardless. Borrowers right now might not like the mortgage rates that are available, especially if they are looking for a Conventional Loan without the best qualifications and compensating factors. If you are not building an extremely strong case or have 20% down payment for a Conventional Loan, then it might be wise to look at the 2017 Reasons For An FHA Mortgage. FHA Loans are the most common loan in our country and there is no slowing down here as they offer loans to individuals who are not the most credit worthy borrowers and to individuals without large down payment potential. We will look at the following 2017 Reasons For An FHA Mortgage and go over why these reasons persuade many borrowers to go the FHA Loan route.
Unlike Conventional Loans which require a 700+ FICO score in order to obtain the best rates possible, FHA Loans have minimum credit scores which are way less in comparison. This relaxed requirement on credit scores is why most borrowers are attracted to FHA Loans to begin with. FICO credit scores can be as low as 500 with the general consensus being that a minimum of a 580 score is preferred. If you have a 500-579 FICO score, you will need compensating factors for a lot of lenders in order to get a loan done.
FHA Requirements for down payments are extremely forgiving because as long as your FICO score is 580+ you can get a loan with just 3.5% down payment. If you are in the 500-579 FICO range, you will be required to come up with 10% to get a loan. Unlike other loans, FHA Loans allow for your down payment funds to be 100% gift funds as long as they are from a direct family member and these funds can be sourced.
As with the requirements for down payments, the debt to income ratios for FHA Loans is also on a scale depending on the FICO score. For example, if you are a sub-620 FICO then you will only be allowed a 43% debt to income ratio. On the flip-side, if your FICO is 620+ then you are able to have a 56.9% backend debt to income ratio with a 46.9% frontend ratio. What this means is that your total housing payment can’t be more than 46.9% of your gross monthly income and your monthly debt obligations cannot exceed 56.9% of monthly gross income.
If for any reason you have a bankruptcy, short sale, or foreclosure on your credit report, FHA Loans offer the most lenient waiting periods than other loan programs. If you have a Chapter 7 Bankruptcy your mandatory waiting period is 2 years from the discharge date. If you have a Chapter 13 Bankruptcy you are eligible for a loan after being in your repayment plan for 12 months with trustee approval or the day after your discharge date. Finally, if you have a foreclosure, deed in lieu of foreclosure, or a short sale the waiting period is 3 years from the recorded date or the sheriff’s sale date taking the property out of your name.
As you can see FHA Loans still offer the best and lenient guidelines around and it is still a loan that is a great loan that is easy to close from a lender’s standpoint. Gone are the days when FHA Loans take a longer time to close and there are even cases where obtaining a clear to close can be had in less than 15 days. If you are interested in learning more about 2017 FHA Loans, then you need to call me today at 888-900-1020 or email email@example.com. We look forward to working with you any time days, nights, weekends, or holidays!