By Lizzie Weakley

For years, the Federal Housing Administration was considered a destination for borrowers with low to zero credit scores. However, that cannot be said about today’s department. The FHA is now a go-to place for middle- to low-income workers with good credit histories. A home is a long-term investment, but if you buy a home, you may not be able to provide upfront cash for the home. In this case, a person needs to get a mortgage loan to boost his finances for the purchase of a house.

Related: Know How and When to Apply for Home Loans in 2021

With a low credit score, you may not be eligible to apply for a loan from a conventional financial institution. However, you may still qualify for an FHA loan. Check out the tips below to make sure you qualify for a federal home loan:


If you do not have a credit score, you are not eligible for FHA loans. Your credit score must be at least 580 to be eligible. When your credit score is at least 580, your down payment can be reduced to 3.5%. As a result of the pandemic, most FHA loan lenders have revised and adjusted their credit scores to a higher number. Therefore, it would be wise to raise your credit score to their minimum requirement before thinking of applying for the FHA loans.

Deposit Funds

Your deposit will depend on your current credit score. As mentioned above, you only need to cough up 3.5% if your credit score is within the required minimum. However, having a lower credit score shows that you are a riskier investment and you are likely to get an FHA loan at a high 10% down payment. However, you don’t have to rely solely on your savings to make the deposits. You can also receive gift money, in which your donor provides an official letter and contact details to support the loan.

Debt-to-income ratio

Your gross income should be enough to cover your initial investment, including the FHA loan, without exceeding 50%. You must ensure that your payments, including your taxes, car and student loans, insurance and other expenses, are no more than 43% of gross income.

Mortgage insurance

When you apply for an FHA loan, you are expected to pay a mortgage premium up front (about 1.5% of the loan). However, when the mortgage payment is less than 78% of your home’s value and you are consistent in the payment for at least five years, the premium is increased. You also have to pay an annual mortgage premium.

FHA loans are especially common among first-time home buyers. These loans offer homeowners a great way to finance their home and get the stability they need!

Lizzie Weakley is a freelance writer from Columbus, Ohio. In her spare time she enjoys the outdoors and walks in the park with her husky Snowball. For more information on FHA loans, Weakley recommends contacting: Gapital.