Alaska FHA, How Much Can I Afford?
What have you heard about qualifying for an FHA-insured Loan?
- Only inexpensive homes are allowed? Not true!
- You need a lot of money for a down payment? Not true!
- You need perfect credit? Not true!
- Your credit score has to be at least 650? Not true!
- If you ever declared bankruptcy or had a foreclosure, you’re out of luck? Not true!
There are a few key facts about FHA-insured loans that you need to know
Maximum loan amount By law, FHA cannot insure loans that exceed certain amounts based on the metropolitan area or county in which you live. To see what the limit’s are where you live in Alaska, go to Alaska FHA Maximum Mortgage Limits.
Maximum financing: The maximum FHA financing is 96.5% of the appraised value of the home or its selling price, whichever is lower.
Cash required: FHA requires that the home buyer invest at least 3.5% of the sales price in cash for the down payment and closing costs. If the sales price is $100,000 for example, the homebuyer must invest at least $3,500. However, the home buyer can use gifts from family members, your employer, funds from local, state or government agencies, or other sources for the down payment.
Generally, to be eligible for an FHA-insured loan, you must:
- Have a valid Social Security Number (SSN).
- Be a legal resident of the United States
- Be of legal age to sign a mortgage in your state (there is no maximum age).
U.S. citizenship is not required for eligibility. When you indicate on your loan application that you hold something other than U.S. citizenship, the lender must determine your residency status from the documentation you provide. If you are a permanent resident alien, you must provide evidence of lawful permanent residency issued by the Department of Homeland Security, Bureau of Citizenship and Immigration Services (BCIS), formerly the Immigration and Naturalization Service (INS). If you are a non-permanent resident alien, you must show that you are eligible to work in the U.S. by producing an Employment Authorization Document (EAD) issued by BCIS.
The next step is meeting FHA’s qualification requirements (where your income, credit history and savings are evaluated).
Your lender will decide if you qualify for a mortgage based on the “Four C’s of Credit”:
- Credit history involves what you’ve borrowed in the past, and how well you’ve paid it back.
- Capacity to repay refers to your income and your ability to handle the monthly housing payments.
- Cash to close refers to money for the down payment and closing costs
- Collateral refers to the home you’re buying.
To see if you qualify for an FHA-insured mortgage, complete the FHA borrower application form here. If you enter accurate information about your personal finances, and honestly answer questions about your credit history, you may qualify for an FHA-insured loan.
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