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Here are a few of the most important FHA underwriting guidelines home buyers should be aware of when considering their mortgage options.

1. Low down payment – FHA asks for just 3.5% down
2. Less than perfect credit scores
3. Debt to income ratio – can be as high as 43%
4. Employment history – only need 2-year history to qualify

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Not only is the down payment requirement low, but the money for the down payment does not have to come directly from the borrower. A relative or charity can gift the money to the borrower and spare them the pain of coming up with the money out of pocket.

There is one important item to keep in mind with the low down payment. FHA will charge mortgage insurance premiums for the life of the loan for borrowers that pay below 10% down payment. However, the private mortgage insurance can later be removed with a refinance to a conventional loan.

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All in all, the FHA is a great program that allows thousands of borrowers each year the chance to buy a home with affordable terms.

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