What It Takes To Qualify For Real Estate Purchase, by Tara-Nicholle Nelson Inman News™ Here are the bare-minimum lending guidelines on today's market, which would qualify the average borrower for an FHA loan -- these loans, backed by the Federal Housing Administration, offer the loosest lending guidelines around: - 3.55 down payment, based on the purchase price of the home (e.g., $7,000 on a $200,000 home), or a gift of that same amount;
- 3%-6% of the purchase price, on top of the down payment, for closing costs, or a credit from the seller of the same amount; and
- 640 FICO credit score, the middle score of those generated by the 3 credit bureaus (some banks will lend to borrowers with middle scores lower than 640, but will require more than the minimum down payment).
Additionally, these lenders will want documentation for income, asset and job history, including current paycheck stubs, 2 months' bank statements and 2 years of W-2 forms or tax returns, and: - a minimum of 2 years have passed since the discharge of a bankruptcy;
- a minimum of 3 years have passed since a foreclosure;
- anywhere from 0-3 years have passed since a short sale, depending on the circumstances surrounding the short sale.
Meeting these minimums doesn't necessarily mean you're in the best of financial shape, or that buying a home is a good decision for you, especially important for those who are scraping up every penny to qualify, or who have experienced a recent financial trauma (e.g., job loss, foreclosure or bankruptcy). If you fall into any of these categories, make sure you've fully financially recovered from your economic crisis and that you have a cash cushion in place before you buy -- even though your lender may not require it. I'd be delighted to discuss this with you in more detail or answer any other questions you may have about real estate.
Feel free to give me a call! Take Care & Looking Forward to Hearing From You!
Mary Ann, "Your On-Line Realtor
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