Credit Requirements

• According to FHA.com, FHA lenders look at the borrower's past credit history, but there is no set FHA limit for credit scores needed for approval; instead those credit score limits are established by individual banks or lenders. FHA.com says that at least two years must have passed between an applicant's Chapter 7 bankruptcy discharge and that Chapter 13 bankruptcy borrowers could still gain approval if they have made satisfactory payments for one year. Prospective borrowers who are delinquent on any federal debt like student loans are not eligible, but accounts in collection are not necessarily grounds for disapproval for loans, according to FHA.com.
  
  

Debt Ratios

• The FHA mortgage programs have specific debt-to-income ratios that individuals or couples must meet in order to qualify for a loan under the program. These ratios are used to determine how large a loan an individual can afford. According to FHA.com, the borrower's total mortgage payment divided by his gross monthly income cannot be more than 29 percent. The mortgage payment includes principal, interest, any insurance, taxes and homeowner costs, while the gross monthly income includes all monthly income before taxes. In addition, the FHA has another debt income measurement that includes all minimum monthly debt. This debt is added to the mortgage payment and then divided by the gross monthly income. According to FHA.com, the maximum ratio to qualify for an FHA loan is 41 percent.
  
  

Loan Types and Down Payments

• The Department of Housing and Urban Development offers loan programs with a variety of options including standard home loans, the 203k program designed for fixer-upper homes or home improvements, reverse mortgages, energy efficient mortgages, and loans for manufactured and mobile homes. Reverse mortgages are only available to people over age 62 who own their own home, but as long as the property qualifies, the other FHA programs are open to any person. FHA requires a 3.5 percent down payment on the purchase price, which is usually much lower than that of any other lender.
  
  

Loan Limits

• The FHA has loan limits that restrict the amount that can be borrowed based on the state, county and sometimes the city you live in. These amounts are roughly based on the cost of living in the area in regard to home prices. This limit can vary broadly over a matter of miles, but by checking information or the chart on FHA.com you can determine the amount you would be eligible to borrow in your area.