How To Qualify For A FHA Loan?-Down Payment Assistance

The First-Time Home Buyer may qualify up to $15,000 to buy a home at the approved cities that offer the Neighborhood Lift Program. The program is based on an applicant's household income. The participating lenders must be approved under the Neighborhood Lift Program for the down payment assistance program. The requirement for the program is the applicant must contribute 3.5% of the sale price of their funds into the program. The down payment assistance funds will be forgiven if the applicant owns the home for at least five years. The applicant must provide the following documents for a mortgage application:

1. Two years of 1040

2. 30 days pay stubs

3. Three months of bank statements

4. Application Fee (appraisal and credit report)

5. Gift letter from a relative, if needed

6. Self-employed - two years of profit and loss-Schedule C from1040
7. Explanation for any derogatory accounts on the credit report

All documents are verify before the applicant receives a final approval from the lender. The applicant employer will receive a verification of employment and the bank will send a verification of deposits for funds. The applicant's credit accounts will be verify on the credit report. If a charge-off is less than $1,000 and at least 24 months old from the last date of activity, the lender will not require the applicant to pay off the accounts. 

Compensation Factors

To qualify for a FHA loan, the applicant must have a front-in-ratio of 29% and back-in-ratio of 41%. If the applicant's ratio exceed the guidelines, the lender may use compensating factors. The applicant may be approved by the lender based on rental history, reserve funds in the bank and job stability. If the applicant rent is higher than the mortgage payment, the underwriter may approve the mortgage loan. The requirement for a FHA loan is a credit score of at least 620 and the Neighborhood Lift Program may require a credit score of at least 640.

No Credit

The applicant may still qualify for a mortgage loan even if the applicant doesn't t have any credit.  The lender may use alternative credit to qualify an applicant for a mortgage loan as follows:

1. utility account

2. car insurance account

3. rental history

4. rent to own account

Credit Score Below 600

All Applicants with credit scores below 600 may still have the opportunity to purchase an affordable home. The booklet, "Increase Your Credit Score After Short Sale, Foreclosure and Bankruptcy", provides the techniques to increase an applicant's credit scores. The program offers “FREE 30 DAYS COACHING” as well as the booklet at increaseyourcreditscorenow.com

 

We provide monthly newsletters on how to increase an applicant's credit scores and weekly blogging information at increaseyourcreditscorenow.blogspot.com

Opt-Out