How Hard Is It to Get a FHA Home Loan? FHA Loan Requirements for 2021

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Posted on September 3, 2021

Are you looking for a mortgage loan but worry you won’t qualify?


You're not alone — the idea of getting a mortgage can be intimidating, and millions of people worry about loan requirements. 

steps to getting an fha loan

But here’s the thing:


FHA loans make it easy for borrowers just like you to get the necessary financing to buy a house.

Here at Good News Lending, we can get you into your dream home with an FHA loan.


FHA loan requirements aren’t nearly as difficult as you might think — you can qualify with less-than-perfect credit and a higher than average debt-to-income ratio. Not too many lenders can say that!


Check out how an FHA loan from Good News Lending may be just what you need.

FHA Guidelines 2021: The Basics

FHA loans have flexible guidelines because they have a government guarantee — the Federal Housing Administration (FHA) backs the mortgage.


So, if you fall behind on payments, the FHA pays the lender back a portion of what is lost. And lenders pass that flexibility on to you.


That means you can secure a loan with less-than-perfect qualifying factors. 


For example, the minimum FHA credit score requirements for 2021 depend on the lender, but you could qualify with a score that’s much lower than other credit guidelines. 


These flexible FHA loan requirements are just the tip of the iceberg.

Why You Should Consider FHA for Your Home Loan

When shopping for a mortgage, why should you consider an FHA loan for your home? 


Borrowers accept FHA financing for a variety of reasons, but primarily because the flexible FHA guidelines in 2021 are so generous:

  • You only need a small down payment
  • You can have existing debts
  • You can have an imperfect credit history

Rather than waiting for the “perfect time” to secure mortgage financing (and let’s be honest, is there ever a perfect time?), get the funding you need now and with competitive interest rates and fees, too!

Best Home Loan Rates Callout - Good News Lending

Pros and Cons of FHA Loans vs. Conventional Loans

When you think of buying a house, your first thoughts probably migrate to conventional loans.


Conventional loans are a popular option to get the funds you need to buy a house. 


But that doesn’t mean it’s the best option. If you’re shopping for a home loan, consider the pros and cons of different types of FHA loans before making a decision.


Pros

  • Most borrowers need only a 3.5% down payment
  • Borrowers can qualify with lower FHA loan requirements for credit scores
  • Allows higher than average debt-to-income ratios
  • Doesn't have minimum or maximum FHA loan income requirements

Cons

  • Borrowers pay mortgage insurance for the life of the loan
  • Some areas have lower maximum loan limits
  • Borrowers can only use the loan for their primary residence

5 Steps to Get Approved for an FHA Loan

At Good News Lending, we make it easy to get approved for an FHA loan using these steps.


1. Check your credit

Before you complete the FHA loan application, check your credit. If you aren’t sure how, pull your free credit reports here


If you notice negative marks on your credit report, take time to fix it before applying — it’ll increase your chances of approval.


Also, look at your debts. Your total monthly obligations should not exceed 43% to 50% of your income before taxes.

steps to getting an fha loan


2. Complete an FHA loan application

Once you’ve examined your credit report, start an FHA loan application


You’ll apply for the amount of loan you need and provide your personal information and information about your finances. 

This 3-Digit Number Can Save You Thousands! 

The average credit score for new, approved home mortgages is 732 according to the FHFA while borrowers with a 600 credit score or less make up just 6.5% of approved home loans.


What's your credit score?  Give the Good News Lending team a call at 901-651-9935 to discuss your options.

3. Provide your supporting documentation

After applying, you’ll need to “prove” your income, assets, liabilities, and any miscellaneous items that may affect your approval. Your lender may ask for:

  • Pay Stubs from the last 30 days
  • W-2s from the last 2 years
  • The last 2 months of bank statements

4. Clear any conditions

If you have any conditions that affect your approval, provide the documentation to clear them. 


For example, suppose you had an outstanding bad debt on your credit report. In that case, submit proof that you paid it off.


Another condition of approval is an appraisal and title work. If you’re buying a house, the lender will order an appraisal and title history on the home.


This ensures it’s worth at least as much as you offered to pay, and the title is clear of any liens. 


You Shouldn't Have To Choose


Too many borrowers think they must choose between the convenience of an online lender and the hands-on service you might get from the "small guys." 


But We Believe You Can Have It All!


5. Close on your loan

The final step — the moment you’ve been waiting for! — is to close on your loan.


At closing, you’ll review and sign all of the loan documents and provide a cashier’s check to cover your down payment, closing costs, taxes, and (sometimes) prepaid interest.


Then, your mortgage lender will release the funds to pay for your home, and you can start moving in.

Did You Know?

Mortgage rates have hit all-time lows in recent months.  Some people have been able to take advantage of the opportunity and secure a historically low rate. Since rates change all the time, give us a call at 901-651-9935 for an up-to-date rate quote.

Is an FHA Mortgage Right for Me?

An FHA mortgage is an excellent option if you’re looking to buy a home. The flexible FHA guidelines can help you qualify even if you aren’t eligible for a conventional loan.


FHA loans are right for you if you’re looking for flexible guidelines, competitive interest rates, and low down payment options.


At Good News Lending, we work with borrowers from different backgrounds. We make it as easy as possible to secure the FHA financing you need.


Contact us today to get started!

About the Author

Ever since I was a child, I loved playing Monopoly and learned that borrowing money from the bank was actually a good thing.  "Your indebtedness today is your net worth tomorrow," my father would say!

I’ve been in the mortgage business since 2001 and we’ve helped countless families get the home of their dreams.

I believe the loan process should be the easiest part of buying a home. After all, your closing day should be a celebration, not a day of stress!

Wendy Thompson

Wendy Thompson - President of Good News Lending

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