Texas FHA Mortgage Loans
Texas FHA Loan is the easiest mortgage and most lenient loan to qualify for. They offer a low down payment and are available to homebuyers with less than perfect credit. If you’re in the market for a home, you owe it to yourself to research Texas FHA loan options available through Texasfhamortgageloanlenders.com.
We are not a government agency. We are an approved FHA Lender that specializes in FHA Home Loans throughout Texas. We are designated as a “Full Eagle” FHA Lender in Texas. We originate, process, underwrite and fund FHA loans under one roof for a faster and more efficient transaction.
What is an FHA Loan?
The Federal Housing Administration (FHA) insures mortgages that are referred to as FHA loans. They are especially popular with first time home buyers since they only require 580+ credit scores and down payments as low as 3.5%. However, borrowers are required to pay mortgage insurance premiums, in order to protect the lender in the event the borrower defaults on their loan.
Borrowers are able to qualify to receive an FHA loan with a credit score as low as 580 and a down payment as low as 3.5%. With a 10% down payment, the borrower’s credit can be 500 to 579. However, it is important to remember, a lower credit score will result in the borrower receiving a higher interest rate on their mortgage loan.
The FHA program was established in response to all of the defaults and foreclosures that occurred during the 1930s; to provide adequate insurance to mortgage lenders, and to help with stimulating the housing marketing through making loans affordable and accessible for individuals with a low down payment and lower credit score. The federal government basically insure loans on FHA-approved lenders to reduce the risk of loss in the event that a borrower defaults on their loan.
Borrowers who are interested in purchasing a home via an FHA loan with a 3.5% down payment, they will need to have a FICO score of at least 580 in order to qualify. However, if your credit score is less than 580 it doesn’t necessarily exclude you from being eligible for an FHA loan. You will just need to have a down payment of at least 10%.
The down payment amounts and credit score are only two FHA loan requirements. The following is a comprehensive list of all of the FHA loan requirements, which the Federal Housing Authority has set:
- FHA Loan borrowers need to have either worked for the past two years for the same employer or have a steady work history.
- FHA Loan borrowers must be of legal age in order to sign a mortgage in their state, lawful residency in the United States, and a valid Social Security number.
- A minimum 3.5 percent down payment must be paid by a borrower for an FHA home loan. A family member can gift the money for the down payment.
- New FHA mortgage loans are available for primary residency occupancy only.
- Borrowers must get an FHA-approved appraiser to appraise the property.
- The front-end ratio (mortgage payment plus property taxes, HOA fees, homeowners insurance, and mortgage insurance) must typically be less than 31 percent of the borrower’s gross income. You might qualify with as high as a 40 percent ratio. Your lender will have to provide justification as to why they believe you are an acceptable risk for the mortgage. Any compensating factors that are used for loan approval must be included by the lender.
- The back-end ratio (mortgage and all of the borrower’s monthly debt, i.e., student loans, car payment, credit card payment, etc) must usually be less than 43 percent of the borrower’s gross income. You might be qualified with a percentage as high as 50 percent. The lender will have to justify why they think the mortgage offers an acceptable risk. Amy compensating factors that were used for approving loan must be included by the lender.
- Borrowers are required to have a 580 minimum credit score for maximum financing with a 3.5 percent minimum down payment.
- Borrowers must have a 500-579 minimum credit score for a maximum 90 percent LTV with a 10 percent minimum down payment. A case-by-case basis will be used by FHA-qualified lenders to determine the creditworthiness of an applicant.
- Borrowers typically must be out of bankruptcy for two years and have good credit re-established. Exceptions may be made if you have been out of bankruptcy for over one year if there are any extenuating circumstances that were beyond your control which caused your bankruptcy and you managed your money responsibly.
- Borrowers usually must be out of foreclosure for three years and have good credit re-established. Exceptions may be made if there were any extenuating circumstances and your credit has been improved. If you were not able to sell your house due to having to move to a different area, that doesn’t qualify as an exception to this three-year foreclosure guideline.
- At appraisal, the property is required to meet specific minimum standards. If you are buying a house does not meet those standards and a seller won’t agree to the necessary repairs, the only option you will have is at closing to pay for the repairs that are required (which is held in escrow until the required repairs are completed).
FHA Loan Benefits: Credit Score Requirements That Are Less Strict and Low Down Payments
An FHA loan purchase loan is typically one of the easiest kinds of mortgage loans that you can qualify for since your credit can be less-than-perfect and only a low down payment is required. For maximum financing on a FHA loan, a 3.5 percent down payment is required.
Borrowers who are unable to get private mortgage insurance, have lower credit scores, or unable to come up with a 20 percent down payment, should look into whether or not an FHA loan is really the best option for their individual circumstances.
Another advantage offered by an FHA loan is that it is an assumable mortgage, so if you want to sell your house, the buyer will be able to “assume” your loan.
Individuals with bad or low credit, have been foreclosed upon, or undergone a bankruptcy might be able to qualify for an FHA loan still.
An FHA Loan Requires Mortgage Insurance
Here is the catch: Since FHA loans do not have the strict standards that a conventional loan has, it does require two types of mortgage insurance premiums: one is a monthly payment and the other one is either paid up front in full or may be financed into their mortgage payments. FHA loans also require the house to meet certain conditions and an FHA-approved appraiser must appraise it for a purchase FHA loan, FHA 203k mortgage or an FHA refinance loan.
Upfront mortgage insurance premium (UFMIP) — This is an upfront one-time monthly premium payment. That means the borrow has to pay a 1.75% premium on the home loan, no matter what their credit score is. Example: on a $300,000 loan the payment would be $5,250 (1.75% x 300,000 = 5,350.) The amount may be paid at closing upfront as part of the overall settlement charges or may be rolled into their mortgage payments.
Annual MIP – Although it is referred to as an annual premium, actually it is a monthly charged that is part of the mortgage premium. This mortgage insurance premium amount is a percentage of the loan and it is based on the length of the loan, loan size, and loan-to-value (LTV) ratio of the borrower.
For example, on a $300,000 loan, the annual premium with a 30-year term and less than 95 percent LTV would be $2,400 (300,000 x 0.80% = 2,400). The monthly insurance premium payment would then be $200 (2,400/12).
How Long Is A Borrower Required to pay FHA Mortgage Insurance Premiums?
How long the annual MIP last will depend on your LTV ratio and amortization term that appears on your loan origination date.
On loans with FHA case numbers that were assigned after or on June 3, 2013:
Mortgage insurance will need to paid by the borrowers for the whole loan term if the LTV is higher than 90% at the loan origination date. If the LTV is 90% or less, then the borrower will have to pay mortgage insurance for 11 years or the mortgage term, whichever happens first.
FHA Loan Limits
Maximum mortgage limits on FHA loans are set by the Federal Housing Authority and vary by county and state. There are certain counties where you might be able to qualify for financing for a mortgage of $729,750 and 3.5 percent down payment. On Fannie Mac and Fannie Mae loans, conventional financing have a maximum of $625,000 currently.
Click here, to find your area’s FHA mortgage limits.
How To Get An FHA loan?
The Federal Housing Authority must approve a lender to help you obtain an FHA loan. You can go to Thetexasmortgageloanlenders.com to locate FHA lenders and also shop for FHA mortgage quotes easily and quickly. You can submit your loan request and instantly get a custom quote from the Texas FHA Mortgage Loan Lenders who are partnered with hundreds of lenders. This is an easy and free process and you are able to do it anonymously, without having to provide any of your personal information. If you are interested in a lender’s loan quote, you are able to directly contact us.
Interest Rates on FHA Loans
Below are the current FHA interest rates. The Texas Mortgage Loan Lenders can also be used to see if the FHA interest rates for your specific situation. Then you just submit your loan request with a down payment of less than 20% and you will receive a customized FHA quote from several different lenders instantly. The filter button can be used to filter on FHA mortgage rates only.
To see which interest rate you can qualify for, just simply enter your specific details, like monthly debts, income, and credit score (under Advanced). The once you are ready to speak to a lender, you can contact one of the lenders that appears in your search.
(read more about us & our dedicated FHA Loan Specialists)
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-Kim B. (Sugarland, TX)