If you’re thinking about purchasing a home, you may wonder: “Can I make too much money or too little money to qualify for an FHA home loan?” The answer is “no.” There is no minimum or maximum when it comes to FHA income limits. In fact, these loans are available for a variety of consumers, not just those unable to secure conventional home loans.
Basic misconceptions about FHA loans
In addition to questioning FHA income limits, you may also wonder if FHA home loans are reserved only for first-time buyers (learn more about an FHA loan for a first-time home buyer). While it’s true FHA loans typically target first-time home buyers or provide opportunities to those who have experienced bankruptcies or foreclosures, the agency offers loans to all kinds of home purchasers. There actually aren’t any FHA loan income limits. Read on to learn more about how you might qualify for an FHA-backed mortgage loan.
FHA home loan qualifications
So what is the FHA looking for in potential loan candidates? The same thing as any other financial institution when it pertains to income limits—the FHA examines the borrower’s ability to pay the mortgage loan and meet their regular monthly payments.
Here are a few specific things FHA loan officers examine:
- Debt-to-income ratio
- Current assets
- Proof of current and consistent past employment
- Income verification
- Repayment history on past financial responsibilities
- Outstanding collections, judgments, or federal debt
- FICO credit score
The bottom line is your gross income isn’t the end-all-be-all. What’s most important is how much money you have left once you meet your monthly financial obligations. And even if your credit score falls below the usually desired 580, you could still qualify for an FHA home loan. You’ll just have to pay the more typical down payment of 10% of the loan amount.
FHA home loan limits
While there isn’t a minimum or maximum limit on your income, different areas of the country have caps on the amount you can borrow. For instance, single-family homes in metro Washington D.C. have a significantly higher maximum FHA loan limit than properties in rural Pennsylvania. It all depends on the type of home you plan to purchase as well as the local market.
You can purchase a home priced above an area’s FHA lending limit, but you’ll have to put down more dough upfront. The FHA would require you to pay the difference between your approved loan amount and the property cost as your down payment.
If you’re planning to purchase a home, let our OVM Financial experts help. Give us a call, or start your online application. You can also check out other articles with information about FHA minimum credit scores as well as an FHA vs. VA loan.