Current FHA Guidelines

One government body which may be able to help some struggling homeowners is the Federal Housing Administration (FHA), a branch of the Department for Housing and Urban Development (HUD).

The FHA has several programs in place which can provide homeowners with mortgage insurance or help them to refinance their loans by reducing their principles or adjusting their interest rates.

Can the FHA help you?  Here are some of the guidelines in place for FHA programs.  These guidelines have changed over the years, so you need to be informed of the current ones in order to know whether or not you might benefit.

The reason the FHA guidelines have been revising guidelines is there will be more money available in the FHA loan reserves and so the agency can try and prevent defaults and foreclosures.

The result is that accountability has been increased for lenders, and loan requirements have been tightened.  Previously, the credit score “requirements” for FHA loans were fairly loose and un-enforced, but now they are much stricter.

Credit Needed For an FHA Loan

What kind of credit scores do you need to get into FHA programs now?  You need a score of at least 580 in order to be eligible for the maximum 97.5% Loan to Value for FHA financing.

With this program you only need to furnish 3.5% as the down payment.  If your credit score is between 500 and 579, you could qualify for the 90% Loan to Value for FHA financing, which leaves you with a 10% down payment to make.

If your credit score is less than 500, you are no longer eligible for FHA mortgage loans.  There may be exceptions though if your credit history was non-traditional, so don’t assume you can’t get help before you ask.

In particular, if you were a disaster victim, you may be eligible through program 203(h) (Mortgage Insurance for Disaster Victims) for 100% mortgage financing with no down payment. 

FHA mortgage insurance programs cover a lot of different types of homes, so if you are thinking of applying, take time to look into the additional guidelines for each type of building you may be interested in.

Regardless of whether it is a house or a condo or something else, you will have to inhabit it as your primary residence in order to receive assistance through the FHA. 

There are other ways of getting a zero down home loan too.  If you are willing to move out to the countryside, you may qualify for zero down payment on a house in a USDA targeted area.

There homes are located in areas which have been extra depressed since the economy crashed, and the government wants to try and encourage people to reside in these places again and resurrect the rural economy

There are income level restrictions in place on these rural programs, but they may be another option for you if you can’t get into one of the FHA programs.  If your credit score is standing in your way, you may be able to fix it within a couple of years, at which point you may qualify for an FHA program.