Loans insured by the Federal Housing Administration (FHA) are usually the easiest and most flexible types of mortgage loans to secure. The FHA doesn’t originate loans, but instead, insures lenders against losses in case of default thus providing mortgage lenders the opportunity to originate loans to higher risk borrowers like those who may be credit challenged or who may lack a mortgage payment history like first-time home buyers.
The basic requirements for obtaining an FHA loan include:
– Two years of steady employment, preferably with the same employer
– Income that has either been steady or increasing over the previous two years
– No more than two 30-day late payments over the previous two years with a minimum credit score of 620 (though no credit score may be acceptable in some cases)
– Your mortgage payment cannot exceed 31 percent of your gross mortgage with your total obligations not exceeding 43 percent of your gross income
– Bankruptcies must be at least two years old while a previous foreclosure must be at least three years with perfect credit since the blemish
Although these are just general basic requirements, different lenders may also have additional or different requirements in order to obtain an FHA loan.