Do You Qualify For An FHA Loan in San Diego?

Owning a home of your own is a common goal of many adults. A loan from the Federal Housing Administration appeals to potential home buyers due to the lower down payment and minimum credit score requirements. It is even possible to qualify for this loan if you have declared bankruptcy in the past. Here are the qualifications you need to get approved for an FHA loan on a home in San Diego.

Home Requirements

You can only use an FHA loan to purchase a house that will be your primary residence. It can not be used to fund a vacation home or investment property. You are required to move into the home within 60 days of your closing date.

An FHA-approved appraiser must inspect the property and value the home at or above the asking price. A home inspection is also required, and the inspector must validate that the house at least meets the minimum property standards.

There is a limit on how much you can borrow from the FHA to purchase your home. The amount varies by county and is based on the median sales prices of homes in the area. Currently, the maximum loan amount offered for a single-family home in San Diego County is $753,250, based on a median of $655,000.

Employment History

There are no income requirements for an FHA loan, but you do have to prove that you are steadily employed and have been for some time. During the application process, you need to provide bank statements, pay stubs and tax returns to the lender.

Credit Score Limits

A credit score of 580 or higher puts you in a great position to qualify for an FHA loan. The minimum score to qualify is 500 according to the FHA guidelines, but individual lenders may work with you if yours is below that amount.

Down Payment Terms

Your down payment requirement may go as low as 3.5 percent of the purchase price if your credit score is above 580. An amount of 10 percent is required if your credit score is below 579. You are able to use gift money to help with the cost, provided the donor includes a letter specifying no repayment is needed along with their contact information.

Debt-To-Income Ratio

Lenders take a look at what percentage of your income is paid towards debt every month when they review your application. This helps them determine if you have too much debt to realistically take on a mortgage at this time. To qualify for an FHA loan, your DTI needs to be less than 50 percent.  You can use an online DTI calculator to learn your ratio in advance.

As long as your desired home and personal financial position meet the above requirements, you do qualify for an FHA loan in San Diego. Working with an experienced Realtor® and lender will help you quickly get qualified for this loan and into a home of your own.

At UW Funding, we know all the rules and regulations of obtaining an FHA loan in San Diego, and we are ready to help you secure one. We can help even if you have less than excellent credit. Contact us today to learn more.

Sources:

https://entp.hud.gov/idapp/html/hicost1.cfm

https://www.nerdwallet.com/article/mortgages/fha-loan

https://www.nerdwallet.com/article/loans/personal-loans/calculate-debt-income-ratio