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FHA First Time Homebuyer


FHA mortgage lenders as wells as first time home buyers are always concerned with cash down payment, credit payment history, capacity or how much their payment will be compared to their income and the amount of the appriased value of the house they can qualify for. within we address these issues for first time home buyers.


  • Down payment only 3.5% of the purchase price.
  • Gifts from family or FHA Grants for down payment assistance and closing costs OK!
  • Sellers can credit the buyer’s up to 6% of sales price towards buyers costs and pre-paid.
  • No reserves or future payments in account required.
  • FHA regulated closing costs.


  • 12 months after a chapter 13 Bankruptcy FHA mortgage Lender approvals!
  • 24 months after a chapter 7 Bankruptcy FHA mortgage Lender approvals!
  • 3 years after a Foreclosure FHA mortgage Lender approvals!
  • No Credit Score FHA mortgage Lender approvals!
  • 580 required for 96.5% financing or 3.5% down payment FHA mortgage Lender approvals.
  • 500 required for 90% financing or 10% down payment FHA mortgage Lender approvals.
  • Bad Credit with minimum 500 FICO credit score with 10% Down Payment FHA. For FHA mortgage applicants with credit scores between 500 and 579 must make down payments of at least 10% down!
  • Read more about FHA Qualifying Qualification Summary – Bad Credit – No Credit – Manual Underwrite – Collections-Judgement’s –BK Purchase


HOW DOES FHA WORK FOR FIRST TIME HOME BUYERS? FHA Mortgage loans are popular with first-time home buyers. After the subprime meltdown and housing collapse that started in 2006, it has been more difficult for first-time loan applicants to qualify for a mortgage. Many loan applicants will find that the  FHA mortgage loans are still easier and require the lowest down payment option of only 3.5%  to get approved. In addition the seller can credit you up to 6% of the sales price to cover all of your closing cost. As long as you don’t own a home or already have an FHA mortgage you can apply for a new FHA mortgage.

EASIER TO APPLY FOR FIRST TIME HOME BUYERS- The FHA mortgage loan is the most lenient in regards to the lowest down payment, lowest credit requirements, and highest debt to income ratio requirements. As long as you can meet the FHA minimum Cash, Credit, Capacity requirements you will qualify for an FHA mortgage. Most will find its much easier approval process than with an conventional loans.

EASIER CREDIT SCORE REQUIREMENTS FOR FIRST TIME HOME BUYERS-The FHA is lenient on credit issues and is understanding of personal situations. Some blemishes will be excused with an explanation. If you had a previous bankruptcy, you can get an FHA loan two years after the discharge date. Also, if you had late payments all in a distinct time frame and had a good payment history following that, they will overlook those imperfections. Collections are not a problem. If, however, you have had any federal liens, like tax liens or defaults on student loans, then you will not be eligible for an FHA loan. Your credit score needs to be only a 620 when putting down the minimum three percent. Other conventional loans require a score of 720 or higher for prime rates.

FHA DOWN PAYMENT REQUIREMENTS FOR FOR FIRST TIME HOME BUYERS-The best advantage of an FHA loan over conventional loans is the low cash needed at closing. Most first-time home buyers do not have the funds available to put 20 percent down plus pay closing costs. The FHA requires only 3 percent of the loan value to be paid at closing. Some of these funds can come from a gift from a family member also. They will allow for 6 percent in seller concessions, meaning the seller can pay up to 6 percent of the closing costs.

FHA DEBT TO INCOME RATIO REQUIREMENTS FOR FIRST TIME HOME BUYERS-The FHA allows a high debt-to-income ratio. If you have a car loan, student loans and credit cards, you can still qualify. Perhaps you are getting a raise later in the year but want to buy now. Or maybe your car will be paid off in six months. As long as you feel you can afford the payment, the FHA will allow a 50 percent debt-to-income ratio. This is determined by adding up all of your debt, including your proposed new mortgage payment, and dividing it by your monthly income to receive a percentage.

FHA MORTGAGE LENDERS PROVIDE THE LOWEST INTEREST RATES FOR FIRST TIME HOME BUYERS- FHA loans have very competitive rates. This will equate to a lower payment every month. By having a lower interest rate, you will pay much less over the life of the loan. The FHA often offers lower rates than a traditional 30-year fixed loan.


  • How does HUD define a first time homebuyer?FHA defines a first-time home buyer (FTHB) as an individual who has had no ownership in a principal residence during the 3-year period ending on the date of purchase (closing date) of the property. A FTHB includes any individual that has.
  • Can a first time buyer obtain a reduction to their FHA mortgage insurance premium?No reduction in premium is available to first time buyers.
  • Is housing counseling required for first time home buyer to obtain an FHA mortgage?encouraged by FHA, particularly for first-time home buyers.  Lenders must ensure that borrowers receive all required counseling, and that all counseling is provided by HUD-approved housing counseling agencies.
  • Can a Homeownership Set Aside Program grant be used for down payment?The Federal Home Loan Bank’s (FHLB) Affordable Housing Program (AHP) Homeownership Set-Aside Grant Program is an acceptable source of down payment assistance and may be used in conjunction with FHA-insured financing. Secondary financing that creates a lien against the property is not considered a gift or grant even if it does not require regular payments or has other features forgiving the debt.  Any AHP Set-Aside funds used for the Borrower’s Minimum Required Investment (MRI) must also comply with the additional requirements set forth in Handbook 4000.1 II.A.4.d.ii or II.A.5.c.ii.    The Lender must:   • Verify and document the Borrower’s receipt of the grant and terms of use.   • Verify and document that the Retention Agreement required by the FHLB is recorded against the property and results in a deed restriction, and not a second lien. The Retention Agreement must:    – provide that the FHLB will have ultimate control over the AHP grant funds if the funds are repaid by the Borrower;    – include language terminating the legal restrictions on conveyance if title to the property is transferred by foreclosure or Deed-In-Lieu (DIL), or assigned to the Secretary of HUD; and    – comply with all other FHA regulations.    For additional information see Handbook 4000.1 II.A.4.d.iii.(L)(2) or II.A.5.c.iii.(L)(2) available at
  • Can gift funds come from the seller FHA mortgage lender or other interested party?;  • a charitable organization;  • a governmental agency or public Entity that has a program providing homeownership assistance to low- or moderate- income families or first-time home buyers.   The Mortgagee may only permit.
  • Can gift funds be provided from a friend or other unrelated party?income families or first-time home buyers.    For additional information see Handbook 4000.1 II.A.4.d.iii.(F) or II.A.5.c.iii.(F) available.
  • Are government entities required to provide a gift letter?If a gift is provided by a governmental agency or public entity that has a program providing homeownership assistance to low- or moderate- income families or first-time homebuyers, a gift letter is required.  The gift letter must be signed.
  • What is the American Dream Down Payment Initiative?, you must be first-time home buyers (defined as an individual and his or her spouse who have not owned a home during the three-year period prior to the purchase and have incomes not exceeding 80% of area median income). ADDI funds may be used to purchase.
  • Are there FHA mortgage programs available for single parents?HUD does not have specific programs designed for single parents, however, many of HUD’s programs assist low and moderate income first-time home buyers which could include single parents. To find these resources, you should start.
  • Where can I find the guidelines regarding gift funds?assistance to low or moderate income families or first-time home buyers.   Cash on Hand is not an acceptable source of donor gift funds.    Only Family Members may provide equity credit as a gift on property.
  • When must a FHA mortgage lender provide the “For Your Protection: Get a Home Inspection” form?to prospective home buyers at first contact, be it pre-qualification, pre-approval, or at the time of initial loan application. In any case, the lender must provide the form to the prospective home buyer no later than at the time of initial loan application.




US Mortgage Lenders has an extensive lender network that allows us to provide unique and mortgage solutions. Contact US for the most update information on terms and conditions. All Information on this site Is for example, hypothetical purposes and should NOT be relied on for decision making.
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