Understanding FHA loan requirements

The Federal Housing Administration or FHA in the United States offers a means of financing the purchase of homes for qualified applicants. In order to successfully complete the process and receive financing for the purchase of a new home, the applicant must meet the basic FHA loan requirements. Those requirements focus on current income levels, past credit history and even the current amount of debt that the applicant is managing.

FHA loan requirements usually begin with a minimum income requirement. Simply put, the applicant must have a steady monthly income that is at least a certain amount. Any figure below that amount will disqualify the applicant from consideration.

One of the more important FHA loan requirements has to do with the credit rating and history of the applicant. This includes information on how he or she has managed credit in the past, plus the current balances in open credit accounts. The idea is to make sure the applicant does not current carry an amount of debt that could make granting the home loan a severe risk.

Assessing the debt to income ratio is also part of the FHA loan requirements. Basically, this is a comparison of the amount of income generated by the applicant to the amount that must be paid on outstanding debts each month. If adding in a mortgage loan payment is likely to create severe hardship, there is a good chance the loan application will not be approved.

FHA loan requirements are in place to prevent consumers who are not financially prepared to take on the responsibility of a home loan to avoid getting caught in what could be a difficult financial situation. The loan requirements put in place by the FHA also make it possible for qualified candidates who may have trouble getting loans elsewhere to achieve their dreams of owning a home. By complying with all FHA loan requirements, applicants can buy a home and be reasonably sure of managing the payments without a great deal of distress.

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