Unlike most loan programs, FHA does not have specific credit score requirements. Although a high credit score may assist in getting the mortgage approved, a low score is not automatically caused for denial. If the credit scores are low, then it is up to the borrower to demonstrate his/her ability and willingness to pay the loan back. This allows the borrower to explain the circumstances surrounding the credit difficulties and have that explanation considered in the underwriting process.

Because of FHA’s leniency, some borrowers with past credit problems elect to use FHA for loans when they have a substantial down payment rather than getting a higher interest rate conventional loan. FHA tends to be more flexible than Conventional financing in the money needed to purchase the home.

In an FHA mortgage, the customer must put at least 3% of the sales price into the transaction. Some of this money may be used for the down payment and the rest for closing costs. Keep in mind, however, that the total cost to close on an FHA is commonly over 3%. With the down payment, closing costs, money to establish escrows for taxes and insurance plus interest to finish out the month of closing, the total costs can be closer to 6 or 8% of the sales price.

The interest rate that you select will also have a bearing on the total costs. If you select a lower rate so that you can reduce your payment, you may end up paying additional money towards “points”. At the same time if you are comfortable with a slightly higher payment you may find a lender that is willing to reduce the costs to close in favor of a higher interest rate.

One FHA Loan Florida Requirement allows the borrower to get the funds necessary to close from several sources. They include such areas as personal savings, gifts, grants, loans from retirement accounts and seller contributions. To see if you’re eligible for an FHA Loan, start your online application to see!