Loan requirements for an FHA Loan mandate the borrower be employed for at least two full years prior to applying. The loan must be used for a primary residence; it cannot be used to purchase a second home or investment property.
As for their credit score, the borrower must have either:
- A minimum credit score of 580 (although a “no credit” program is available) to qualify for the 3.5% down payment, or
- Have a credit score of 500-579 and make a 10% down payment.
In addition, FHA loan requirements also mandate no bankruptcy on the borrower’s credit report in the last two years or a foreclosure in the last three years.
With more strict financial guidelines and credit score requirements for conventional loans, FHA loans enable more people to qualify for a mortgage and become a homeowner. FHA loans are well known for their lower down payment requirements, acceptance of lower credit scores, forgiveness of adverse credit history (like bankruptcies or foreclosures), and more flexible income requirements.
American Mortgage Services, Inc. is not affiliated or endorsed by the government or the Federal Housing Administration (FHA).