The Federal Housing Administration (FHA) loan is a mortgage provided by lenders who are approved by the Federal Housing Administration. This loan is different from conventional mortgages as it is designed from low to mid-income families. This loan requires a low credit score and a small down payment.
How much down payment do I need for an FHA loan?
The FHA loan requires a small down payment. You can put down as low at 3.5%. This is one of the lowest down payment you can make. With only 3.5% down, it means that the FHA will provide you the remaining 96.5% to buy the house.
How much credit score do I need for FHA loan?
The credit score required for the FHA loan is not high compared to other types of mortgages. You will need as low as 500 to get a mortgage. The following is an estimation of how much you will need to put down based on your credit score according to fha.com.
- The score of 580 or more you need a 3.5% down payment
- The score between 500-579 you need a 10% down payment
In general, the down payment on the FHA loan will mainly depend on your credit score. It would be difficult to get this loan without a credit history.
Requirements for FHA mortgages
Since the mortgage is designed for low to mid-income families, it is obvious that the money could be lost without strict requirements. The following are some of the many requirements of FHA loans.
- Debt-to-income ratio (DTI) less than 43%
- The house must be your primary residency
- Proof of employment and employment history
- A credit score of at least 500
- A down payment of at least 3.5% depending on your credit score
- You cannot be approved for this loan on an investment property
- You will need proof of social security number
Even if there is a ton of requirements for the FHA loan, borrowers can take advantage of lower down payments needed for the loan. In addition, you can use gifts to cover your down payment and closing costs.
