The Requirements of FHA Loans: Other Things to Know

People who want to afford a house purchase can seek financial assistance by applying for conventional loans. Lenders usually ask for a big down payment to make the loan possible. Some people can afford this, but not all have enough money saved to cover this cost. However, that does not mean they have no right to get their property. 

There is still a way to make that happen—Thanks to the FHA loan by the Federal Housing Administration. This article will tell you how you can qualify for an FHA loan and whether or not it is suitable for you. 

What Is an FHA Loan?   

The FHA loan is a type of loan provided by private lenders but guaranteed by the Federal Housing Administration. This government guarantee reduces the risk on the lender’s behalf, allowing them to offer more affordable terms. Some of the perks include possible lower down payments and closing costs.

How to Know If It Is the Right Loan for You

FHA loans are available even if you are subject to the following conditions :

  • Your current credit score does not permit you to qualify for other conventional loans.
  • You have no enough cash to pay up your 20 percent down payment requirement.
  • You need financial assistance in paying your closing costs. The FHA loan enables the buyer to pay the closing costs over time, along with the monthly mortgage payment. 

The only downside is that you need to pay the premium that costs 1.75 percent of the total base loan amount and an annual mortgage insurance premium of 0.45 to 1.05 percent of the loan amount. 

How to Get Qualified for an FHA Loan

Here are the requirements for a successful FHA loan:

  • There is no set income requirement for FHA loans. However, your income should be verifiable.
  • Your purpose is to buy new and existing homes with one to four units. You cannot use it for commercial purposes. 
  • The property you buy should be your primary residence. It is not supposed to be used for a vacation home or second property that you do not plan on using regularly.
  • The property you are eyeing should meet FHA appraisal requirements, which only ensures its capacity to be a worthwhile investment that is livable and long-lasting.
  • It should meet the FHA mortgage amount limit. The maximum amount varies per location so consult with your loan provider first.
  • You need to pay an insurance premium that serves as added security for the loan provider. 
  • You need to have a good credit history to qualify for a lower down payment. Unlike conventional loans, though, the FHA is not as strict with credit scores. You only need to get a FICO score of at least 580 or higher, and you could get as low as a 3.5 percent down payment requirement. 
  • If your FICO score is 500, you can still get qualified, but you need to pay a higher down payment of up to ten percent of the total amount of the property. Nevertheless, however, this is still lower than the average 20% in conventional loans.


The FHA loan is specially designed for first-time homebuyers who need some financial assistance as they purchase their first home. The government can help you get a good deal, with low down payments and low credit score requirements. If you are determined to apply for this mortgage, check the list of approved lenders on the Housing and Urban Development website. Check various lender offers too to see which ones meet your budget.

If you need to get FHA loans in Sacramento, we can help you. Hawkins Home Loans can assist you in finding the best-matched mortgage with the lowest rate and the quickest closing times possible. Schedule an appointment with us. Call us at 916.371.6300.