A reader asks, “Hello just want to know how much do my annual gross amount have to be to get approved for a FHA loan?”
Two of the most common myths about FHA home loans are that the FHA is only for first-time homebuyers and that FHA loans have a minimum income or maximum income requirement. None of those things are true. The FHA does not have a minimum dollar amount the borrower must earn in order to qualify, and there is no income ceiling or limit for FHA loans. FHA loans are not specifically for disadvantaged people, nor are they specifically for first time home buyers.
However, it’s important for all potential FHA borrowers to know that your lender will determine whether or not you can afford the new FHA loan by calculating your debt to income ratio (DTI).
That means measuring how much debt you have versus how much income you have. In general, a borrower who has a debt to income ratio of less than 40% of your income taken up by debt (including the amount that would be added by the FHA home loan) are in a much better position to get an FHA loan approved than those who are at or near 40% or higher.
Again–there is no income minimum, but your lender will do the math to see if you can realistically afford the loan. Other factors that can affect the transaction’s approval or denial include your debt repayment history, how much of a down payment you can make and other factors.
Those who have higher debt to income ratios but have cash reserves may find that, depending on how much those cash reserves are, the lender may be able to approve the loan regardless of a more marginal DTI.
If you are in the planning stages for an FHA loan and are concerned about your debt to income ratio, contact the FHA directly by calling them at their toll-free number: 1-800 CALL FHA. Ask to be referred to a local, HUD-approved housing counselor who can help you with these issues and much more.
Do you have questions about FHA home loans? Ask us in the comments section. All comments are held for review prior to posting.
