FHA Loan Approval Macon Georgia: Prior to the introduction of the FHA mortgage program way back in 1934, lending guidelines were literally all over the map. Prior to the FHA loan, banks could ask for 30 or 40 percent or more for a down payment. You also had to have a standing relationship with the bank. Mortgage loans then would be for a relatively short term and at the end of say five years the loan would have to be paid off completely or refinanced into yet another short term loan. Up to that period, only those considered well-to-do could afford to own a home. The FHA loan program changed all that.
Today, the FHA mortgage asks for only 3.5 percent down. Here in Macon, GA with the median sales price around $125,000, the minimum down payment would then be $4,375. Compare that with a conventional mortgage and a 20 percent down payment of $25,000. One of the reasons that first time home buyers prefer the FHA loan is due to the minimum down payment required. In Macon, the FHA loan limit is well above the median home value for the area and FHA loans can be as high as $271,050 for single family homes.
In order to obtain an FHA loan approval in Bibb County, both the buyer and the property considered will be evaluated. Lenders must first determine that borrowers can afford the new monthly payment along with current credit obligations and they do that by calculating debt to income ratios. Lenders compare your mortgage payment which includes a monthly allotment for property taxes, insurance and an amount toward the annual mortgage insurance premium with your gross monthly income. Let’s say you’re borrowing $150,000 and taking out a 30 year fixed rate loan at 3.50%. The principal and interest payment is $673. If you add taxes of $125, insurance at $75 and mortgage insurance of $106, your housing payment is $979. If your gross monthly income is $4,000, your housing debt ratio is 24, or 24 percent. FHA lenders like to see the housing debt ratio around 28-33 percent.
Lenders next add up all your other monthly credit obligations in order to arrive at a total debt ratio. Let’s say you have student loan payments of $200 and a car loan at $450. Your total debt ratio would then be 41. FHA lenders like to see this number right around the 41 mark yet it can as high as 50% with good credit scores, etc.
Your gross monthly income is documented reviewing your two most recent W2 forms along with your most recent pay check stubs covering a 30 day period. If you’re self-employed or have additional self-employment income you’ll need to provide your two most recent federal income tax returns. Lenders will then add up these two years and average the amounts providing a monthly figure. Year over year income should be relatively consistent.
FHA loans are known to be a bit more lenient with regard to credit when compared with conventional loans with less than a 20 percent down payment. While there are no federal guidelines for a credit score, most FHA loans ask for a minimum score of 620 with some lenders allowing scores as low as 580 with 10% down payment. When loans are approved in this range, borrowers need to be prepared to document why the scores are in this range and are the result of isolated instances beyond the borrower’s control, such as being laid off from work or an extended illness.
Finally, lenders will make sure the property you’re buying is in good shape and the price is justified when comparing your property with similar homes in the area.
Getting an FHA loan approved in Macon is pretty simple and can often be done in minutes. Document the minimum 3.5 percent down payment, show funds available for associated closing costs, demonstrate a decent credit history and document your income.
Buyers located in more rural locations in GA should also learn more about the 100% USDA loan criteria. Select locations just outside of Macon, Valdosta, Columbus, Marietta, Savannah, Tifton are still eligible for this program.
For questions, please contact Five Stars by submitting the short Request Contact form at the top of this page. You can also call us 7 days a week at ph: 800-871-2636