FHA Minimum Credit Score 2016

FHA Minimum Credit Score 2016

Credit score - FHA announced a new policy to address risk. FHA changed the minimum credit score for new borrowers.

• FHA requirements new borrowers will now be required to have aminimum credit score of 580 to qualify for 3.5% down payment
  
• FHA loan requirements new borrowers with less than a 580 credit score will be required to put down at least 10%

This has allowed the FHA to better balance its risk and continue to provide financing for home buyers.

Debt-to-income ratio - FHA loan requirements include a maximum debt to income ratio. When a borrower applies for an FHA mortgage, they are required to disclose all debts, open lines of credit, and all possible approved sources of regular income. Using this data, the lender and FHA can calculate the borrower's debt-to-income ratio.

• Most lenders will limit maximum debt-to-income to under 50%
• FHA maximum debt to income ratio is 54.99%
• Manual underwriting maximum debt to income ratio is 43%

FHA Minimum Credit Score 2016

Closing cost - FHA allows the seller to pay up to 6% of your closing cost.

If you are buying a $100,000.00 house FHA allows the seller to pay up to $6,000.00 for your closing cost. It must be in writing in the sales contract, "Seller will pay up to 6% of buyer's closing cost."

If you do not write it into the sales contract then you will be paying the closing cost. In the state of Florida closing cost for a $100,000.00 house average around $4,300.00 depending on taxes, insurance and who's paying the transfer tax and owner's title insurance.

By allowing the seller to pay for your closing cost you will decrease the amount of money required to buy a home. Buying a $100,000.00 property requires $3,500.00 down payment and if the seller pays up to $6,000.00 for your closing cost you will only need around $4,000.00 to buy a $100,000.00 in Florida.

Are you short funds to close? The FHA no closing cost loan allows all of your closing cost to be rolled into your loan including your appraisal fee, hazard insurance premium and even your escrow account.

Are you a first time home buyer? Do you need to get pre-approved for a first time home buyer program in Florida?

FHA minimum credit score 2016 

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