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(864)663-1359

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    • Home
    • Apply Now
    • Contact Us
      • Spartanburg
    • Branches
      • Spartanburg, SC
      • Lexington, SC
    • Loan Programs
      • First Time Buyers
      • VA Loans
      • USDA Loans
      • FHA Loans
      • Conventional Loans
      • Refinance
    • Mortgage Calculator
    • Meet Our Team
Palmetto Mortgage Group | Upstate

(864)663-1359

  • Home
  • Apply Now
  • Contact Us
  • Branches
  • Loan Programs
  • Mortgage Calculator
  • Meet Our Team

FHA Loans

A man filling out forms on a desk

 

What is a FHA Loan?

An FHA Loan is a mortgage that is backed by the Federal Housing Administration rather than a mortgage lender and acts as a gateway to home ownership for people with lower incomes, lower credit scores, and/or minimal down payments. Unlike conventional loans that require a 20 percent down payment or additional private mortgage insurance, borrowers choosing an FHA loan are eligible for a loan with only as little as 3.5 percent down with a mortgage insurance premium. These are most common with first time home buyers.


FHA Loan Requirements (as of 2019)

To be eligible for this type of mortgage, borrowers must meet the following requirements:

-Credit Score and Down Payment

Borrowers must have a minimum credit score of 500 to be approved with a 10 percent down payment and a FICO score of 580 or above to be approved with a 3.5 percent down payment.

-Work History

FHA loan approval requires steady employment history or two years of work experience with the same employer, and the income must be verifiable through paycheck stubs, bank statements, or your federal tax return.

-Housing Guidelines

The mortgage can only be used for a primary residence (as opposed to an income property or vacation home), and an FHA-approved appraiser has to appraise the property and ensure it meets the Housing and Urban Development’s guidelines for FHA properties.

-Debt-to-Income Ratio

Your monthly debt payments, not including a mortgage should not go over 31 percent of your pre-tax income. For example, if your gross monthly income is $5,000 a month, your debt from car payments, credit card payments, and student loans should not exceed $1,550 a month. With a mortgage, your debt-to-income ratio should not exceed 43 percent a month, meaning that all of your debt, including your house payment, should be less than $2,150 if your pre-tax income is $5,000 per month.


Bankruptcy and Foreclosures

Borrowers can not be approved for an FHA loan within two years of a bankruptcy or three years of a foreclosure. However, most lenders will factor in extenuating circumstances.

Advantages of FHA Loans:

  • Required down payment is only 3.5% of the purchase price
  • Money for the down payment can be a gifted from outside sources
  • Seller’s concession is up to 6% of home purchase price
  • Bankruptcy or foreclosure does not necessarily disqualify a borrower
  • FHA mortgage can be refinanced up to 97.75% of the value of the home
  • Cash–out refinance available up to 85% of the value of the home

Equal Housing Opportunity ECOA
Licensed in South Carolina
*IMPORTANT NOTICE: Never trust wiring instructions sent via email. Cyber criminals are hacking email accounts and sending emails with fake wiring instructions. These emails are convincing and sophisticated. Always independently confirm wiring instructions in person or via a telephone call to a trusted and verified phone number. Never wire money without double-checking that the wiring instructions are correct.

THIS SITE IS NOT AUTHORIZED BY THE NEW YORK STATE DEPARTMENT OF FINANCIAL SERVICES. PHONE NUMBERS DISPLAYED ARE NOT FOR USE BY NEW YORK BORROWERS. NO MORTGAGE SOLICITATION ACTIVITY OR LOAN APPLICATIONS FOR PROPERTIES LOCATED IN THE STATE OF NEW YORK CAN BE ACCEPTED THROUGH THIS SITE.

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The Palmetto Mortgage Group | NMLS# 2340949

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