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How to Qualify for an FHA Loan

April 15, 2020 by Shannon Christenot

How to Qualify for an FHA Loan

Many of us have dreams of owning our own homes, not solely for the purpose of having a roof over our heads but also for investment. It’s no secret, however, that homes are expensive and cannot be easily bought. It requires shelling a ton of money—money you may not have now.

This is where a Federal Housing Administration (FHA) loan comes into play. Ideal for first-time home buyers, it offers a low barrier to buying a home.

What is a Federal Housing Administration (FHA) loan?

An FHA loan is a mortgage that’s insured by the government. It can be used to buy a home, refinance an existing home loan, or rehabilitate a home that is in dire need of repairs. Even though FHA loans are issued by private lenders like banks and credit unions, the government protects them against losses in the chance that you default on the loan. As a result, borrowers who have less than ideal credit scores or those who aren’t capable of putting down a hefty down payment can have higher chances of qualifying. Down payments can be low as 3.5 percent, and debt-to-income ratios as high as 50 percent are usually allowed.

The amount you borrow is capped, however, and the limit hinges on the conforming limit for the area you choose. You must also adhere to strict health and safety standards to qualify. Plus, if you’re only opting for an FHA loan for the low-down payment, it should be noted that you also have to purchase mortgage insurance, which can make FHA loans more expensive than other types of mortgages.

Even though it’s typically first-time homebuyers who opt for FHA loans, repeat buyers or homeowners looking to refinance their mortgage can also qualify, so long as you’re purchasing a house or a multifamily residence where you’ll be spending most of the time.

How do I qualify for an FHA loan?

In order to qualify for an FHA loan, you should satisfy a number of requirements. Listed below are the minimum requirements, but it should be noted that some mortgage companies may have additional stipulations.

  • Credit Score: Your credit score must be at least 500. If your score is between 500 and 579, you can still be eligible for a loan, but you will have to put down a larger down payment.
  • Down Payment Funds: If your credit score is 580 or higher, your FHA down payment can be as low as 3.5 percent. For credit scores between 500 and 579, you’ll have to pay 10 percent of the purchase price.
  • Debt-To-Income Ratio (DTI): The FHA requires that you have a DTI of less than 50. This means that your monthly debt payments can’t be more than 50 percent of your pretax income.
  • Property Approval: Whether you’re buying a house, condo, manufactured home, or multifamily home, the property has to meet FHA minimum property requirements. The agency needs an appraisal apart from a home inspection to make sure that it’s a good investment and meets basic safety and livability standards.
  • Mortgage Insurance: FHA mortgage insurance is already part of every loan. When you avail of an FHA mortgage, you will be required to make upfront mortgage insurance payments and make monthly payments after.

To make sure that you’re getting the best FHA mortgage rates and loan terms, it’s worth shopping with more than one FHA-approved lender so that you can compare offers. If you need help with qualifying for an FHA loan in Los Angeles, get in touch with us today.

Filed Under: FHA Tagged With: California, FHA loan Los Angeles, FHA mortgage rates, Housing loan, Los Angeles

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I cannot recommend Shannon highly enough! As an independent contractor, I knew getting a mortgage would be a little difficult, and Shannon supported me and helped make it work every step of the way. If I ever need brokerage services again, she'll be my first call!read more
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We’ve worked with Shannon and her team twice and both experiences were stellar. The first was buying our first home and she walked us through the process and explained everything along the way to help us get quickly up to speed. The second time we were going for a refi in maybe the most turbulent mortgage market ever as COVID hit. She guided us through all the hurdles and worked double time to satisfy all the lenders new requests. We got a rate a full percent lower. I can’t recommend this team highly enough.read more
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Shannon Christenot is the most amazing lender we’ve ever had. As a matter of fact this is the second time we’ve used Shannon to do a mortgage with us. She held our hand every step of the way. She made the whole process stress-free as well. And when we were coming down to the wire to finish our escrow within the 30 days she got us an extension Without even asking. Now we are locked into a very low rate. We’ve saved hundreds of dollars per month for the next 30 years. We cannot Thank Shannon enough. I would recommend Shanon to anyone thinking of buying a home or refinancing.read more
Tony Bilby
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Shannon and her team were professional, competent, and swift when it came to the lending associated with my home purchase. We were able to get the loan approved and close on a house in less than 30 days. Record time!read more
Joshua Barton
Joshua Barton
16:05 23 Nov 19
I have had the pleasure of working with Shannon for 8 years - her knowledge of the mortgage process and attention to clients is unparalleled. The Los Angeles market can be tricky with high dollar homes and unique income of the Entertainment Industry, but Shannon takes charge and leads everyone through to successful closings like clock work - cannot recommend her enough a true Rock Star in Mortgage world.read more
Lauren S
Lauren S
04:52 18 Oct 19
Working with Shannon was a real pleasure. She was always available and got back to me promptly with any necessary information. I was able to refinance my mortgage at a rate considerably lower than another larger company quoted who I had started working with. I look forward to working with Shannon again and I highly recommend her to anyone looking for a competent and decent mortgage broker.read more
Mike White
Mike White
02:15 27 Sep 19
As first time home buyers we had no idea what we were doing. We were pre-approved by a well known company but quickly discovered that we absolutely did not want to work with them for the actual mortgage. Shannon was recommended to us by a friend and I called on a Saturday morning. By Saturday evening we were well on our way to buying a house (we closed three days ago!). Shannon made navigating these foreign waters so easy, answering all of our newbie questions with patience and grace. Plus she got us a fantastic rate. We are so grateful for Shannon and can not recommend her enough. WE OWN A HOME!!read more
Alaine Smith
Alaine Smith
13:15 26 Sep 19
It was wonderful working with Shannon! She is attentive, thorough, and intelligent. It was easy to communicate with her because she took time to hear and understand my goals and always responded quickly. I highly recommend her to anyone looking. The customer service she provides exceeds expectations by a long shot! Thank you, Shannon, for all your help!read more
Julie Mckay
Julie Mckay
17:20 28 Aug 19
I just purchased my first home! Shannon and her team were truly a dream to work with. I was never left in the dark and she was always quick to respond with all of my questions. My experience couldn't have been easier. I highly recommend Shannon and would use her again in a heartbeat! She is the BEST!read more
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jojo quijada
19:55 27 Aug 19
I've been in the real estate business for over 5 years now, and I always trust Shannon to work with my clients. She and Josh are an AMAZING TEAM! Buyers love to work with Shannon as she gets things done asap and answer any and every question/concern. I couldn't recommend a better person for lending. Can't thank her enough!!read more
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Rotimi Ayanbeku
20:12 15 Aug 19
I always go back to Shannon because she is one of the best in the business! I've worked with Shannon over the years, however, she outdid herself in my last deal. She was so professional, caring and effective that my clients were comparing everyone else in the deal to Shannon. More importantly, we were ready to fund in less than two weeks. Once again, Shannon affirmed my belief in her that she always rises to the occasion. Thank you for being the best!read more
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Shannon Christenot is an Equal Housing Lender. As prohibited by federal law, we do not engage in business practices that discriminate on the basis of race, color, religion, national origin, sex, marital status, age, because all or part of your income may be derived from any public assistance program, or because you have, in good faith, exercised any right under the Consumer Credit Protection Act. Disclaimer: Programs subject to change without notice. All borrowers must qualify per program guidelines.

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