Many people think that an FHA loan is a ‘first-time homeowners’ loan.
And when you see the benefits and flexible requirements of an FHA loan, it’s easy to see why.
Fortunately, an FHA loan is not just for first-time homeowners. This loan is available to anyone who qualifies for it.
One of the biggest questions we get about this loan is ‘how big of a loan can I get?’
This article was crafted to give you all the information you need, to answer just that.
FHA Loan Overview
FHA loans are backed by the Federal Housing Administration and are intended to provide an avenue for people who do not qualify for conventional loans, to get mortgages and become homeowners.
Because these loans are government-backed, lenders can have more lenient credit requirements and can accept lower down payments while still being able to offer competitive interest rates.
So if your credit score has taken a hit for whatever reason, this loan could be a great option for you.
You may even be able to secure an FHA loan if you have gone through a Chapter 13 bankruptcy.
How Much Down Payment Do I Need For An FHA Loan?
The down payment required for an FHA loan is largely dependent on your credit score.
If you have a credit score of 580 or higher, you can expect a down payment requirement of around 3.5%.
What Else Do I Need To Qualify For An FHA Loan?
Beyond a suitable credit score and down payment, there are other requirements necessary to qualify for an FHA loan.
Use this table to check if you and your potential home are suitable for an FHA loan.
Homeowner Requirements:
- Credit score: 500 and above
- Down Payment: 10% if credit score is between 500-579.
- Income: No official minimum or maximum requirements
- Debt-to-Income Ratio: 43% or below
- Mortgage Insurance: You MUST get mortgage insurance. Your upfront mortgage insurance premium (MIP) is 1.75% of your loan. Your monthly or annual insurance premium is determined by your lender and your other qualifications.
Property Requirements:
- Property conditions:
- Safety – Home must be in a safe environment
- Security – Home must be able to offer protection for its occupants
- Soundness – The home should have no structural defect
- Location: Home must be located in the continental U.S, U.S. Puerto Rico, Guam, American Samoa, the Commonwealth of Northern Mariana Island, or Virgin Islands
- Appraisal: The home should be appraised by an FHA-approved appraiser. They will check the conditions of the home as well as the value of the home.
How Much FHA Do I Qualify For?
When trying to determine what FHA loan amount you qualify for, you need to consider two things:
- FHA maximum loan limits
- Lenders’ loan limits for you
FHA Loan Limits
FHA loan limits vary from county to county and are determined by the area the property is in (low-cost area or high-cost area), and the type of property it is (one-unit property, or multi-unit property)
For a one-unit home, the FHA loan limit for low-cost areas is usually set at 65% of the nation’s conforming limit, and is capped, for high-cost areas, at 150% of the nation’s conforming limit.
Here are the FHA loan limits for 2023:
| Most Areas | High-Cost Areas | Alaska, U.S. Virgin Islands, Hawaii, Guam | |
|---|---|---|---|
| 1- Unit Property | $472,030 | $1,089,300 | $1,633,950 |
| 2-Unit Property | $604,400 | $1,394,775 | $2,092,150 |
| 3-Unit Property | $730,525 | $1,685,850 | $2,528,775 |
| 4-Unit Property | $907,900 | $2,095,200 | $3,142,800 |
You can find the loan limit for your area here.
Lenders’ Limits
While lenders will not offer you an FHA loan above the FHA loan limits, the exact amount that they offer you will be determined by their level of confidence that you will be able to pay the loan back.
They may make that determination based on your DTI, credit score, income, or a number of other factors.
There is normally room for negotiation so have a discussion with your local lender to get the best deal.
How Much FHA Loan Can I Qualify for Calculator?
Once you have determined the FHA loan limit in your area, you can use our mortgage calculator to give you a rough idea of how much FHA loan you qualify for.
Some of the things that you will need to consider when trying to do your calculations are your income, your current monthly debt payments, and other deciding factors.
Remember that different lenders will likely offer different loan amounts, so shop around to find a lender willing to offer you the amount you desire at competitive rates.
How Much FHA Mortgage Can I Afford?
There is nothing worse than taking out a huge mortgage, only to realize that you cannot keep up with the monthly payments without great financial strain, or worse yet, you can’t keep up with the payments at all and are at risk of losing your home.
It is therefore, very important to try to gauge how much you can reasonably afford to get in your current financial position.
To figure out what FHA loan amount is suitable for you, look at factors like your income, intended mortgage amount, down payment savings, and current debt obligations.
Use these figures, along with any other relevant figures, to determine what your monthly mortgage payments will be, and what monthly and annual income you will need to be able to comfortable service your intended mortgage.
If the determined income level needed is above your current income level, you might want to consider a mortgage amount more aligned with your current income level.
Secure Yourself an FHA Loan
Becoming a homeowner is a dream for so many, and with the flexible requirements of an FHA loan, that dream can now become a reality.
Give yourself the best chance of securing an FHA loan big enough to buy your dream home, by using the information given in this article to determine the right FHA loan amount to ask for.
If you need any more advice or if you would like to get a free rate quote, give us a call.
Frequently Asked Questions
How much do I need to make to buy a $300k house with FHA loan?
Your income requirements to get a $300k FHA loan will be determined by multiple factors like your credit score, savings, and current debt.
If your credit score is 580 or above, you will need to have a down deposit of 3.5% ($12.25k) ready, to secure a $300k loan.
You will also need your DTI to be 43% at most. If it is above that, you may need to increase your income or lower your current debts before securing a $300k loan.
Use our mortgage calculator to get a better idea of the income you would need to service a mortgage of this size.
How much income do I need for a 200k FHA loan?
Use our mortgage calculator to try to determine the needed income level for a $200k loan.
Keep in mind that this may differ with different lenders as you may be offered different rates and may need different down payment amounts.
How many months of income do you need for an FHA loan?
There is no official set amount of income you need or number of months of income you need to qualify for an FHA loan.
You will, however, be required to show proof of income for the last 24 months (2 years).
If there are any disruptions in steady income in the last 2 years, you can share the details surrounding those disruptions and offer documentation as proof.
How much 203k loan do I qualify for?
A 203k loan is aimed at providing homeowners with one loan that covers both the price of the property and the renovations they wish to do on the home.
While 203k loan requirements may be slightly different, the loan has the same limit as all other FHA loan limits. These limits vary per county. The price of your desired home plus the renovations should not go over the FHA limits.
If you apply for a limited FHA 203k loan, the renovations cannot cost more than $35k.
How much FHA refinance loan can I qualify for?
The amount you can get through an FHA refinance loan is dependent on the kind of FHA refinance loan you want. You will however almost never be able to get any FHA loan that exceeds the FHA loan limits set per county.
