FHA Loans In Fort Worth

Fort Worth is the fifth-largest city in Texas and the thirteenth-largest city in the United States. The Fort Worth real estate market is highly competitive. Fort Worth has the highest percentage rise in median house sale price in the country, up over 30% from the previous year. The typical DFW home sales price increased 29.3 percent in June to $426,000 from $329,500 in June 2021.

What is an FHA Loan?

The federal government insures FHA loans. The Department of Housing and Urban Development (HUD) oversees the FHA program. FHA home loans have lower minimum credit scores and down payments than conventional loans, making them particularly appealing to first-time homeowners.

How does an FHA Loan Work?

FHA-approved lenders offer FHA home loans, not by the Federal Housing Administration. FHA mortgage insurance protects lenders against losses. If a property owner defaults on their mortgage, FHA will pay a claim to the lender for the unpaid principal balance. Lenders can offer homebuyers more mortgages by FHA insuring the loan against the borrower’s future default.

FHA loans come in 15-year and 30-year terms with fixed interest rates. The agency’s flexible underwriting standards are designed to help give borrowers who might not qualify for private mortgages a chance to become homeowners.

Most mortgage loans available today have a maximum or limit for borrowers. This is true for traditional mortgage loans and government-backed programs such as FHA. Borrowers who want to use a specific home loan program must keep under these boundaries with a few exceptions.

FHA Loan Requirements

• Credit

FHA loans require a credit score of 580 to qualify for a 3.5% down payment. However, borrowers with FICO scores under 580 and down to 500 may still be eligible, provided they come up with a 10% down payment, and certain restrictions will apply. They must have a solid compensating factor to compensate for the lack of credit.

• Income

The borrower’s ability to pay the loan back determines their affordability. The maximum allowable DTI for FHA loans is 57 percent and is evaluated case-by-case depending on compensatory factors.

• Assets

Borrowers with credit scores over 580 are eligible for a 3.5% down payment. They must be able to source the funds for closing on the loan. If a family member or relative is giving them “gift funds,” the donor must also provide a paper trail on where the money is coming from along with a gift letter from the donor.

After exhausting their funds for the purchase, borrowers must be able to show reserves. Reserves, or liquid financial assets, are readily convertible to cash. All borrowers must show reserves after closing on their home loan. The higher their reserves, the better their likelihood of getting approved for a home loan.

Apply for an FHA Loan in Fort Worth

It’s your turn now! Speak with our FHA Mortgage Consultant for personalized advice and assistance with FHA loans. Call 817-779-7133 to get started.