FHA Home Loans in Colorado
A large number of prospective home buyers and existing homeowners living in Colorado may benefit from 2020 higher FHA mortgage loan limits in the counties of Adams, Boulder, Denver, Jefferson, Larier, El Paso and across the state.
FHA insure mortgage loans. They do not make them. Your lender helps you with that part. One of the requirements for FHA loans are its upfront mortgage insurance of 1.75% of your loan amount.
Example: If your loan is $350,000, the upfront MI is: $6,125. Borrowers typically finance the upfront MI into their loan. Additionally, the second requirement for an FHA loan is monthly mortgage insurance.
FHA Loan Features
Excellent product for people who have credit scores below 640
Allows higher debt ratios than conventional loans with automated underwriting
Employment less than 2 years is permitted with explanations
Allows non-occupant co-borrowers
Allows a gift for down payment
Allows the seller to pay up to 6% of the purchase price toward your closing cost
Requirements to get a Colorado FHA loan to buy a home are listed below:
Primary Residence – The home that you are purchasing must be your primary residence. A duplex, triplex or fourplex are allowed, but you need to live in one of the units.
Credit Score – A credit score of 580 or higher is needed for FHA loans by banks and traditional lenders. Our programs actually will allow someone with a 500 credit score but they'll need 10-percent down payment instead of 3.5
Job History – 2 years of documented employment history. Unemployed for six months may be accepted if currently employed.
FHA 3 to 4 unit properties - There is an important rule based on rental income.
A Triplex or Fourplex (Quadplex) must pass a self-sufficiency test to receive financing. The total monthly market rents as determined by an FHA appraiser for all units (including the one you intend to occupy) must be greater than the new monthly mortgage principle, interest, taxes, homeowners, and private mortgage insurance. In addition, a vacancy loss be factored in too. HUD applies a vacancy loss rate on the market income of 25%. So, the following formula applies.
(Market Rents per appraiser * 75%) > (Principle + Interest + Taxes + Insurance + MI)