FHA Loan Requirements

[Mark Bennett]

FHA loan requirements are generally more lenient than those of conventional lenders. The Federal Housing Administration is a government program administered by Housing and Urban Development (HUD) to help Americans who can't qualify for a conventional mortgage loan become homeowners.
Compare FHA Lenders

Mortgage Payment Calculator

FHA Loan Requirements: Income Requirement to Qualify for an FHA Mortgage Loan

There is no minimum income requirement to obtain an FHA mortgage loan, but you must demonstrate steady income for at least three years, and demonstrate that you've consistently paid your bills on time. Seasonal pay, child support, retirement pension payments, unemployment compensation, VA benefits, military pay, Social Security income, alimony, and rent paid by family all qualify as income sources. Part-time pay, overtime, and bonus pay also count as income as long as they are steady.

FHA Loan Requirements: Debt-to-Income Ratio Required

The FHA allows you to use 29% of your income towards housing costs and at total of 41% towards housing expenses plus other long-term debt. Compare this with a conventional loan, which generally allows only 28% toward housing and 36% towards housing expenses plus other debt.

You may even qualify to exceed this ratio, under certain circumstances. Factors which may allow you to increase this ratio include:
(1) A large down payment;
(2) A demonstrated ability to pay more towards your housing expenses;
(3) Substantial cash reserves, for example at least three months of mortgage payments;
(4) Net worth enough to repay the mortgage regardless of income;
(5) Evidence of acceptable credit history or limited credit use;
(6) Less-than-maximum mortgage terms;
(7) Funds provided by an organization;
(8) The potential to earn greater income in the near future;
(9) A decrease in monthly housing expenses from previous living circumstances.

More FHA loan requirements.

Detailed FHA loan requirements.

Summary FHA loan requirements.

Thoughts on FHA loan requirements.


Image: Mannequin