FHA loans provide a great opportunity to buy a home in Murfreesboro, Tennessee. The FHA (Federal Housing Administration) was created to help the average American have a chance at owning their own home. One of the reasons that FHA loans are so popular is because of the low down payment option. FHA loans allow you to purchase a home with only a 3.5% down payment. There are also less strict requirements to get an FHA loan (compared to conventional loans), such as being able to qualify with a credit score as low as 500.
Murfreesboro, TN – FHA Loan Eligibility Requirements
Below are some of the basic requirements to get an FHA loan:
- Credit Score – To qualify for the 3.5% down payment, you must have a 580 credit score or higher. If your credit score is between a 500-579, you still may qualify for an FHA loan, but will be required to put 10% down.
- Debt-to-Income – You can not have a debt-to-income ratio higher than 43%. However, if you have “compensating factors” you might be able to get approved with higher debt levels (a compensating factor could be more money in savings, longer job history, or great credit).
- Financial Statements – You should expect to be required to provide your 2 most recent bank statements, pay stubs, and tax returns.
- Property Requirements – The home you want to buy must not have any hazardous conditions or materials. If the home is in bad shape and needs repairs, it might qualify for a FHA 203k rehab loan. For a standard FHA loan, the home must be move in ready though, and the appraisal of the property must specify conditions which will inform the underwriter if it is ready to be moved into.
- Owner Occupied – Must occupy the home yourself and it must be your primary residence. FHA loans are not available to finance an investment property, second home, or vacation home.
- FHA Loan Limits – FHA loan limits are the maximum amount that you may borrow using an FHA loan in a particular county. You can look up the 2020 FHA loan limits for Murfreesboro, TN (Rutherford County) on this page.
- Mortgage Insurance – All FHA loans, regardless of the lender, require two types of mortgage insurance. This includes what is known as UPMIP (Upfront Mortgage Insurance Premium) and the regular MIP (Mortgage Insurance Premium). FHA MIP acts similarly to how PMI (Private Mortgage Insurance) on a conventional loan acts. If you would like to see what your estimated mortgage insurance costs will be (and also estimate your monthly mortgage payment), use this FHA loan calculator.
These are just some of the basic requirements to get an FHA loan. If you are approved for an FHA loan, your lender may have additional requirements.
Would you like to find out if you qualify for an FHA loan? We can help with FHA loans in Murfreesboro, TN.