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FHA Loan Credit & Income Requirements

What to Know about FHA Credit and Income Requirements

FHA loans have more flexible credit and income requirements than conventional loan programs. This means that if you’ve had credit difficulties in the past or your cash flow is limited today, you may still qualify for an FHA mortgage. Don’t let your concerns about credit or income stop you from applying, because you could be eligible nonetheless.

Imperfect Credit Accepted

The FHA loan requirements are more flexible than conventional loan requirements when it comes to credit score and credit history. Even if you’ve been denied for a mortgage in the past due to imperfect credit, you may still be eligible for an FHA loan. As part of the loan application process, New Day Financial LLC. will order your credit report.

The FHA loan program allows lower credit scores than some other programs. If your credit score is equal to or above 580, you may be eligible for maximum financing. If your score is lower, you may still be eligible if you can contribute a larger down payment.

New Day Financial LLC. will examine your entire loan application, including your credit score, credit history, income, assets, and debts to make a loan decision. An eligible credit score is not a guarantee that you will qualify for a loan.


Income Ratio

When qualifying for a mortgage, your DTI is more important than your income. DTI stands for “debt-to-income,” and it’s a ratio that lenders like NewDay use to determine if a mortgage is right for you. FHA loans have looser DTI requirements than conventional loan programs, which means that you could qualify even if you have high debt or low income.

To calculate your DTI, first add up all your monthly debt payments. Take the total of your monthly debts and divide it by your monthly income before taxes. This number should be expressed as a percentage. For example, if you owe $1,000 every month and you make $4,000, your DTI ratio is 25%.

If the DTI ratio that you calculated is less than 50%, you may be eligible for an FHA loan depending on your circumstances. New Day Financial LLC. will examine your total loan application, including DTI and other factors like credit score, assets, and residual income, to make a loan decision. 


Take Advantage of Flexible Qualifications

Flexible credit and income requirements make FHA mortgages an excellent option for borrowers who may not qualify for conventional loans. If you think you may qualify for an FHA loan based on the information above, reach out to us at 866-800-0473 or submit an inquiry online.