FHA loans are government loans that have more flexible underwriting guidelines. They are an option for buyers who do not qualify for a conventional loan due to credit history, frequent job changes or lack of funds.
Credit History - FHA loans are underwritten through an automated portal and have more flexible credit requirements and may not require collection accounts to be paid off
Employment - job changes in the same line of work are acceptable
Cash to close – FHA allows the down payment, closing costs and prepaid items to come from a gift from a family member
Down Payment – FHA requires a 3.5% down payment on single family and multi-family residences up to a 4 family (3 and 4 family properties require 3 months reserves which cannot be gift funds)
Qualifying - FHA loans may be approved with higher debt ratios if there are compensating factors such as high credit scores and/or reserves
Non-occupying co-signers – FHA allows a non-occupying co-signer to be on a loan for the purchase of a single family and both borrowers income and debt are calculated into one ratio