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3 Ways to Ensure FHA Loan Approval

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An FHA loan is a popular mortgage, especially for first-time home buyers, since getting an FHA (Federal Housing Administration) loan approval can be easier than getting a conforming loan. As long as you meet the FHA guidelines for credit and debt, you will be approved.

1. Credit

The FHA wants you to have a FICO score of 620. If you have a score of 580 or under, you can still be approved with other compensating factors, like a large deposit. That would require a manual approval, though, instead of the automated approval. By making sure your credit is top notch and that you pay bills on time every month before your application, you can breeze through the approval process.

2. Down Payment

You will need 3.5 percent down if you have a good credit score. If you have a 580 or lower, you will need 10 percent down. There is no way around this. The FHA allows some seller concessions, but no matter what, you will need this down payment.

3. Debt to Income

"Debt-to-income ratio" refers to the amount of your debt, divided by your income, and shown in a percentage. The FHA likes this to be below 43 percent. To ensure an approval, keep your debt low. Pay off any debt you can before applying for a mortgage.