If you’re single, you may be well-acquainted with some of the obstacles that life can throw in your way. And without a spouse to help you shoulder financial obligations, applying for a home loan may seem like a deal breaker. But when it comes to qualifying for a mortgage, your marital status is inconsequential when applying for a Federal Housing Administration loan. All potential homebuyers must meet the same eligibility requirements, which do not include marital status.
TL;DR (Too Long; Didn't Read)
A single person may apply for an FHA home loan because eligibility requirements are not contingent on marital status.
What Is an FHA Loan?
The FHA is under the authority of the Office of Housing, which is the largest office in the U.S. Department of Housing and Urban Development. Although the FHA is not actually the lender for FHA home mortgages, it provides the insurance that protects FHA-approved lenders against loss. FHA-backed mortgages must meet certain underwriting requirements, and mortgagors must meet FHA eligibility guidelines. Compared to conventional mortgages, an FHA mortgage generally has less strict qualifying guidelines, such as a lower down payment and a lower required credit score.
2019 FHA Loan Requirements
Myth-busting the prevailing thought many still hold that FHA loans are only for first-time homebuyers, the truth is that qualifying applicants can also get an FHA loan for successive homes as well as mortgage refinances. The lender handbook for FHA-qualified lenders totals nearly 1,100 pages of requirements for borrowers as well as lenders. But in a nutshell, the top FHA loan requirements as of 2019 include:
- Credit score. A borrower must have a minimum credit score of 500, with some exceptions for extenuating circumstances.
- Debt-to-income (DTI). A borrower’s DTI must be 50 percent or less.
- Down payment. Borrowers with credit scores of 580 or higher must have a minimum down payment of 3.5 percent, and borrowers with credit scores between 500 and 579 must have a minimum down payment of 10 percent.
- Primary residence. The house covered by an FHA loan must be a borrower’s primary residence, not an investment property or second home.
- Property requirements. The property itself must also qualify under FHA’s eligibility requirements.
FHA Debt-to-Income Requirements
Your total monthly debt load compared to your total monthly gross income is your debt-to-income ratio. Expressed as an equation, DTI = Total Monthly Debt Payment/Gross Monthly Income. When you plug your numbers into this equation, the answer is in decimal format. Simply multiply the answer by 100 to find the percentage of your pretax income that you have available to make your monthly debt payments, including loans and credit cards.
Lenders use DTI as one qualifying factor when considering a borrower’s loan eligibility. Different types of lenders, as well as different types of loans, have varying DTI requirements. To qualify for an FHA mortgage, a borrower’s total debt generally cannot be higher than 50 percent of his gross monthly income.
FHA Loan Income Requirements
You don’t have to make a certain amount of income to qualify for an FHA mortgage, whether a minimum or maximum requirement, as long as your DTI is 50 percent or less. But the FHA does require other income-related guidelines such as:
- Credit accounts. You’ll need to have a minimum of two credit accounts that are in good standing, such as loans or credit cards.
- Outstanding and delinquent accounts. You cannot have outstanding debt with other FHA-related mortgages, and you cannot have delinquent debt such as judgments and federal debt.
- Down payment assistance. If you receive down payment assistance for your FHA loan, you must disclose this on your loan application.
FHA Loan Limits
The FHA amends its loan limits each year, based on the economy’s overall housing market prices. Some years the FHA increases its loan limits; some years it decreases the limits; and in other years there is no change. Loan limits are not across-the-board designations – they are different from state to state and also among different counties in each state. Visit the HUD.gov FHA Mortgage Limits search feature to find the mortgage limits in the county and state where you live.
In 2019, the maximum loan limits for FHA loans range from $314,827 to $726,525, depending on a property's location. In counties that HUD defines as "low cost," the maximum FHA loan available for single-family homes is $314,827. An example is Laurens County, South Carolina. In areas that HUD defines as "high cost," such as Washington, D.C., the maximum FHA loan available for single-family homes is $726,525.
FHA Property Requirements
Borrowers aren't the only part of the FHA mortgage equation that must qualify, properties must also qualify to be eligible for FHA-insured financing. Some FHA property requirements include:
- The property must be used as a borrower's primary residence.
- The property cannot be purchased as a non-owner-occupied investment property. Two exceptions are if the borrower is a HUD-approved nonprofit borrower or a state or local government agency.
- Within 60 days of closing on an FHA loan, at least one borrower must be living in the home (if the loan has co-borrowers).
- A property must have an FHA appraisal as well as an inspection.
- The property must meet the standards of property flipping, as outlined in the FHA lender's handbook. Generally, this means that you can't buy a home that was purchased by a previous seller within 90 days of your closing date.
- When you close on a property, your name or the name of your living trust must be on the title.
Documents You'll Need to Provide
When you apply for an FHA mortgage, just as you’re required when applying for any mortgage, your lender will give you a list of documents you’ll need to submit with your application. As a few examples, you’ll need to submit proof of your Social Security number, verification of employment and proof of income, such as recent pay stubs and recent tax returns. Your lender may accept copies, but you’ll probably have to provide some original documents as well.
FHA Manual Underwriting
When your lender submits your application with its supporting documentation, it’s a computerized process. Sometimes, if this automated process rejects a borrower for an FHA mortgage, the lender may be able to perform a manual underwriting procedure that results in a successful loan acceptance. You may have a certain situation that doesn’t quite fit into the standard guidelines, but which may be approved if a lender gives it a second look.
For example, FHA guidelines note that if a credit issue is because of “extenuating circumstances,” a lender may approve a previously declined application in favor of the borrower. With this example, and other types of nonstandard situations, you’ll have to provide a letter of explanation along with supporting documentation.
So if your initial FHA application is rejected, and you think you have a fair case for extenuating circumstances, don't be hesitant to ask your lender to perform a manual underwriting.
Victoria Lee Blackstone was formerly with Freddie Mac’s mortgage acquisition department, where she funded multi-million-dollar loan pools for primary lending institutions, worked on a mortgage fraud task force and wrote the convertible ARM section of the company’s policies and procedures manual. Currently, Blackstone is a professional writer with expertise in the fields of mortgage, finance, budgeting and tax. She is the author of more than 2,000 published works for newspapers, magazines, online publications and individual clients.