Arlington Home Loan, Low credit risk

FHA Loan Eligibility



In search of Arlington home loan? FHA loans are the best you will find in the market. What are FHA loans? These are loans issued by the Federal Housing Administration. This kind of loan is simply the best because;



It is easy to qualify compared to other loans It’s down payment is pegged at 3.5% as compared to other conventional loans which are pegged at 5% The required credit score is lower as compared to other conventional loans.



Qualifying For FHA Loan

It is an open secret that FHA loan are open to every individual and it has no limitations on income. However to qualify for the loan, you must prove that you are a low credit risk. The reason why FHA requires the proof of low credit risk is that it strives to encourage liable home ownership. This is only achievable by deterring buyers from accessing home mortgages that are beyond their means. The information that is usually used to determine the credit worthiness of the prospective customer includes;

Debt-to-Income Ratio. Whenever a review of a loan application is done, the debt-to income ratio of the applicant should be calculated. This is used to determine the suitability of the borrower in making the mortgage requirement. In FHA mortgage program two ratios are used. Namely;



Mortgage Payment Expense to Effective Income. In this kind of ratio, the total mortgage payment is divided by the applicant’s gross monthly income. In order to qualify for FHA loan, the maximum ratio allowed in this case is 31%. Total Fixed Payment to Effective Income. This kind of ratio takes into consideration the applicant’s total mortgage payment and all other monthly payments such as personal loans. The amount is summed together and divided by the applicant’s gross monthly income. In order to qualify, one needs a maximum ratio of 43%. If both ratios work in your favour then you are eligible for the Arlington home loan.



Mortgage Payment Expense to Effective Income. In this kind of ratio, the total mortgage payment is divided by the applicant’s gross monthly income. In order to qualify for FHA loan, the maximum ratio allowed in this case is 31%. Total Fixed Payment to Effective Income. This kind of ratio takes into consideration the applicant’s total mortgage payment and all other monthly payments such as personal loans. The amount is summed together and divided by the applicant’s gross monthly income. In order to qualify, one needs a maximum ratio of 43%. If both ratios work in your favour then you are eligible for the Arlington home loan.



Credit Rating: Just like any other Arlington home loan, this is an important factor since it goes a long way to determine whether your loan application succeeds or fails. It is a necessity for the applicant to be in possession of decent credit score in order to qualify. Listed below are some of the factors which might negatively impact your credit ratings whenever you apply for an Arlington home loan;

Lack of credit history

Judgment Making

late payments

Foreclosure

Bankruptcy



Conclusion Taking into consideration the above mentioned, it also worth to note that there are many variables that ought to be taken into consideration before determining one’s credit worthiness. It is also worth to be aware that the Federal Housing Administration provides mortgage insurance on all loans that originate from the approved lenders.





