What are Federal Housing Administration (FHA) loan requirements, and who is eligible for this type of loan?
The basic requirements to obtain a loan insured by the FHA are fairly simple. The FHA typically requires an investment from the borrower of at least 3 percent of the sales price. These funds can come in the form of a gift from a variety of sources. The home must pass standards that assure that the subject property is in good condition, free from defects, and must appraise for at least the sales price. FHA borrowers are required to have a decent credit history, but their requirements are not as stringent as conventional loans. Stable income is another area of consideration for FHA loans. FHA underwriting has guidelines concerning the length of time clients are employed in the same line of work, but many factors can be considered to compensate for a short time on the job. The ratios of house payment to monthly income, and total monthly debt, including installment payments, revolving payments, lease payments, and the new home payment, to stable monthly household income are set at 29 perce
