Frequently I hear the question ...
"What are the requirements to qualify for a home loan today"?
To answer that, I'm first going to list what are considered as foundation requirements for current mortgage loans. When I say "foundation", I mean that they are the basic requirements that must typically be met by those seeking financing.
The most basic and frequently seen requirements (the foundation of most mortgage approvals) are as follows:
- Credit: Middle FICO Scores are used to determine eligibility.
MOST standards are:
Conventional: 620 FICO Score or higher
FHA: 640 FICO Score or higher. In some cases, the scores utilized can be as low as 580 to 640
VA: 620 FICO Score or higher. Again, in some cases I have options from 580 to 620 FICO Score available for Veterans
USDA: 620 FICO Score or higher
- Employment/Income: *
Stable, sustainable employment needed. Usually a minimum of a 2-Year job history required, unless applicant took their (first) job out of college. Then education can count towards job history.
* Other types of income can also qualify, such as proven Child Support, Social Security, Pensions, Disability, Income from investments, Self-Employment, and etc.
- Down Payment:
* Your Down Payment does NOT have to be 20%.
Let me stress this important point again ...
You do NOT have to put 20% down on your home purchase. Financing options exist for those making lower down payments! Those options are:
* No Money Down options (0% Down) still DO exist. VA and USDA-RD loans are examples of this fact
* 3.5% Down Payment - FHA Loans feature this Downpayment requirement
* 5% or More - Conventional Loans are available for these levels of Down Payment
* Mortgage Insurance Programs - These loan programs allow for transactions with 5% to 19.99% Down Payment
- Debt-to-Income Ratios:
New "Ability to Repay" Guidelines, effective 1/10/2014, require all recurring debt (Mortgage, Car Loans, Student Loans, Credit Cards) to be at or under 43% of Gross Monthly Income.
Note: Exceptions canbe made regarding this requirement. The Debt-To-Income Ratios can be greater than 43% for those qualifying Borrowers with:
- Good credit
- Additional assets (reserves)
- Good job histories
- and for those that RECEIVE APPROVAL IN AUTOMATED UNDERWRITING SYSTEMS FOR THAT SCENARIO
Knowing and working with the requirements shown above should take much of the guesswork out of the question ... "What are the requirements to qualify for a home loan today"?
But as always, to discover and clearly define what requirements are specific to your personal financial scenario, you need to contact me and talk in depth. Only through a thorough examination of all the facts, can we answer the questions you have and ultimately reach a conclusion regarding your financing and abilities to buy.
* To start investigating your current options, contact me. I'll be happy to answer your questions and assist you with your Chicago area financing needs.
Direct: 815.524.2280
Cell or Text: 708.921.6331
Click HERE for your FREE Mortgage Consultation!
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