954-667-9110

FHA Mortgage Lenders Requirements for Georgia Home Buyers

FHA Mortgage Lenders Requirements for Georgia Home Buyers

The FHA or Federal Housing Administration loan program has been helping Georgia mortgage applicants purchase Georgia homes since the 1930s. Today, it’s one of the most popular mortgage loan options for Georgia State home buyers. There are some qualifying criteria you should be aware of, if you’re considering this program. 

GEORGIA FHA MORTGAGE LENDERS

Georgia FHA Mortgage Lenders Requirements

Georgia FHA mortgage applicants with good credit, manageable debt, and a down payment of 3.5% could be eligible for an FHA-insured mortgage loan. Let’s take a closer look at these and other program requirements.

FHA Mortgage Lenders Credit Score RequirementsConsumer credit scores are an important requirement for Georgia State FHA loans in 2017. Mortgage professionals look at these three-digit numbers as an indicator of how you’ve borrowed and repaid money in the past.

Generally speaking, a higher credit score will increase your chances of FHA loan approval, while a lower score could hurt your chances. The widely used FICO credit score range goes from 300 to 850.

The Department of Housing and Urban Development (HUD) has specific guidelines and requirements regarding credit scores. According to their eligibility guidelines, borrowers need a decision credit score of 580 or higher to take advantage of the 3.5% down payment option. And speaking of down payments…

FHA Mortgage Lenders Require A Minimum 3.5% Down PaymentThe minimum down payment required for a Georgia State FHA loan is 3.5%. Specifically, that’s 3.5% of the purchase price or the appraised value, whichever is less. So the mortgage loan can account for 96.5% of the home’s value.

Here’s some good news for borrowers with limited funds. HUD allows borrowers to obtain down-payment funding from a family member or other approved donor, in the form of a gift. The donor must provide a “gift letter” that states they do not expect any form of repayment.

Georgia FHA Mortgage Lenders Loan Limits- There are FHA requirements for the size of the loan as well. In Georgia State, FHA loan limits range from $271,050 to $540,500. They vary by county and are based on median home values within each county. That means pricier real estate markets, like those in the Seattle metro area, tend to have higher limits. 

Debt-to-Income Ratios For Georgia FHA Mortgage Lenders– A debt-to-income (DTI) ratio is a comparison between the amount of money a person earns and the amount he or she spends on monthly recurring debts. Debt ratios are another important requirement for Georgia State FHA loans.

Generally speaking, HUD prefers borrowers to have a total or “back-end” debt-to-income ratio no higher than 43%. This means your total monthly debts (including the mortgage payment) should account for no more than 43% of your gross monthly income.

But there’s some leeway here. HUD refers to them as “compensating factors.” Borrowers with significant cash reserves and/or residual income after the mortgage payment has been made could be allowed to have higher debt ratios. Also, if the FHA loan will only produce a minimal increase in housing payments, higher debt ratios might be allowed. So there are exceptions to this rule.

Document & Paperwork For FHA Mortgage Lenders– All Georgia FHA mortgage lenders require a lot of documents from the applicant, and FHA loans are no exception. Lenders use these documents to verify income, assets and debts, among other things. When applying for an FHA-insured home loan in Georgia State, you will be asked to provide bank statements, tax returns, W-2 forms, and other financial documents.