Many people believe that FHA loans are only for first time homebuyers. The truth is that you still might qualify for an FHA mortgage even if you are not buying your first home. You just need to meet the eligibility requirements for an FHA mortgage.
Who Qualifies for an FHA Mortgage?
To apply for an FHA loan, you need to meet the following requirements.
- You will need a minimum credit score of 500 if you want to put 10% down, or 580 if you want to put 3.5% down.
- You need to be able to make the down payment (which again, depends on your credit score).
- Your debt to income (DTI) ratio should be no higher than 56.9%.
- You must be steadily employed for the most recent two consecutive years. You will need to be able to provide proof of your employment an income.
- You need a clear credit alert interactive voice response system (CAIVRS) report.
- You must be purchasing a qualifying home which meets all the FHA requirements. It can only be a primary residence, not a second home.
As you can see, nowhere in there is there any mention of being a first time homebuyer. Both first time and repeat homebuyers are welcome to apply for FHA mortgages.
Why Do People Think FHA Loans are Only for First Time Homebuyers?
The reason why so many people are under the impression that they can only apply for an FHA mortgage as a first time homebuyer is probably just due to how popular these loans are with people buying their first home.
They might be more readily associated with returning homebuyers if they were not so frequently overlooked by those homebuyers, who do not realize they can apply for an FHA loan.
What are the Benefits of an FHA Loan?
Here is why FHA mortgages are so suitable for first time and returning homebuyers:
- Credit score flexibility: Compared to some other types of home loans, FHA mortgages have relaxed credit score requirements. First time homebuyers are often in the process of building credit, and can benefit a great deal from this. But returning homebuyers also may not have perfect credit, making this a great feature for them as well.
- Flexibility: FHA mortgages have to be used to finance a primary residence, but they are not just for home purchase. You can obtain an FHA loan for construction, refinancing, upgrades or repairs as well. You also can choose whether to get a fixed rate mortgage or an adjustable rate mortgage (ARM).
- Low down payment: The down payment requirement for an FHA mortgage is lower than what it might be for a different type of mortgage, all eligibility factors being equal. First time homebuyers are often just at the start of building up their savings. So, that is one of the reasons they frequently gravitate toward FHA loans. But if you are a returning homebuyer who cannot afford a large down payment, an FHA loan may also be a suitable fit for you.
- Low closing costs: The closing costs for an FHA mortgage are capped. They can also be paid by the seller. This is another feature that makes FHA loans affordable to first time and repeat homebuyers.
At your consultation, we can go over the benefits of FHA loans in detail, and answer any questions you might have.
Apply for an FHA Mortgage in Oakhurst or Beyond
Granite West Funding has helped numerous first time and repeat homebuyers to purchase a home with a flexible and affordable FHA mortgage. To find out if you qualify or to apply today, please give us a call at (559) 540-2275. We are based in Oakhurst, and can help you buy a home or refinance anywhere in CA.
