FHA Loan Requirements VA (Virginia)

Purchasing your first home seems exciting at first. That is until you consider that sizable down payment that often comes with a home purchase. If you’re eyeing your first home but have a low credit score, limited budget, and minimal down payment resources, loan options and assistance from the Federal Housing Administration (FHA) can help. Start by familiarizing yourself with FHA loan requirements in VA (Virginia).

The federal government insures FHA loans, which allows financial institutions to lend money risk-free to qualified individuals. This enables new, potential homeowners to easily pre-qualify for a home loan in Virginia. And don’t sweat it if you’re low on cash. The FHA doesn’t necessarily require cash reserves.

Here’s what else you should know about FHA loan requirements for VA:

Credit scoring guidelines

Even if your credit score isn’t great, you may still qualify for an FHA loan. As of 2022, you can borrow up to 96.5% of your home’s value as long as your score is at least 580.

Amount of down payment required

Coupled with the FHA’s insurance of all home loans, that 580 credit score can also secure you a modest 3.5% down payment requirement. However, if your score falls between 500 and 579, your lender can only finance up to 90% of the home’s value.

Debt-to-income ratio guidelines

When you’re preparing to purchase your first home, carefully calculate your expenses versus income to determine the long-term mortgage payment you can comfortably afford. Lending institutions typically like a debt-to-income ratio of less than 43%. (Just remember to plan for future goals, such as having kids, home maintenance costs, or traveling.)

Employment and income stability

Don’t forget to have a squeaky-clean employment history that includes two years of consistent work with no unexplained gaps.

If you’ve recently graduated, and you’re working your first full-time job in your field of study, you might not have to wait a full two years to apply for an FHA home loan.

Mortgage insurance premium expectations

All FHA loans come with an upfront mortgage premium of 1.75% of your total loan. However, you don’t have to plan to budget for this cost separately because it’s financed into your loan.

Virginia FHA loan caps

FHA mortgage lending limits vary depending on the local housing market as well as the type of home. In Virginia, loan caps for single-family homes start as low as $420,680 and $535,900 and top out at over $950,000 in the metro Washington D.C. area.

Homes and condos, including foreclosures and short sales, are eligible for FHA loan programs if they’re in good, move-in condition. The FHA also features 15- to 30- year loans with fixed or adjustable interest rates. Plus, according to the FHA, the seller can cover up to 6% of your closing costs.

If you’re ready to purchase your first home, let the experts at OVM Financial get you started. Call us, or start your application online. You can also check out other articles about FHA loan requirements in PA and FHA loan requirements in IL.