FHA
Borrower Eligibility

FHA (Federal Housing Administration) mortgage loans are popular for their flexibility and accessibility, particularly for first-time homebuyers or those with less-than-perfect credit. These loans are insured by the FHA, which reduces the risk for lenders and allows them to offer more lenient qualification criteria. However, borrowers still need to meet specific eligibility requirements to qualify for an FHA loan.

Minimum Credit Score
The FHA requires a minimum credit score of 500 for borrowers with at least 10% down payment. However, borrowers with a credit score below 580 may still qualify for an FHA loan with a 10% down payment. To qualify for the lowest down payment of 3.5%, borrowers typically need a credit score of at least 580.

Legal Residency and Citizenship Status
To qualify for an FHA loan, borrowers must meet certain residency and citizenship requirements.

– U.S. Citizens
U.S. citizens are eligible for FHA loans as long as they meet other financial and property-related requirements.

– Permanent Residents
Non-U.S. citizens with permanent residency status (holding a valid green card) can also qualify for FHA loans. They must provide evidence of their residency status and meet the same eligibility criteria as U.S. citizens.

– Non-Permanent Residents
Non-permanent residents (those with work visas or legal immigration status) may qualify for an FHA loan if they can provide valid documentation showing their legal right to work in the U.S. and meet the other requirements.

Non-occupant Co-borrowers
Non-occupant co-borrowers are allowed on an FHA loan. At least one borrower must occupy the property as their primary residence.

FHA loans are not available to borrowers with foreign residency or temporary visa status.

Primary Residence Requirement
FHA loans are intended for purchasing or refinancing a primary residence only, meaning the home you intend to live in full-time. FHA loans cannot be used to finance second homes, vacation properties, or investment properties.

– Occupancy Rule
Borrowers are required to move into the home within 60 days of closing and must live in the home as their primary residence for at least one year.

– Multi-Family Properties
FHA loans can be used to purchase multi-family homes (up to four units) as long as the borrower occupies one of the units as their primary residence. This allows for rental income from the other units to help with mortgage payments.

FHA loans offer an accessible path to homeownership for a broad range of borrowers, thanks to their flexible credit, down payment, and income requirements. However, borrowers must still meet certain eligibility criteria, including credit score thresholds, steady employment and income verification, and property standards. If you’re a first-time homebuyer or someone with less-than-perfect credit or limited savings, an FHA loan could be a great option for securing financing. Be sure to consult with an FHA-approved lender to determine if you meet the requirements and if an FHA loan is right for you.