How to get an FHA loan in NJ
Have a Qualifying Credit Score
When you apply for an FHA loan, you must meet the FHA loan requirements in NJ. To apply for an FHA loan, you will need to gather essential information such as W-2 forms from the last two years, recent pay stubs, two years of tax information, bank statements, and more. Once you inquire for an FHA-approved mortgage lender, they will obtain your credit score.
FHA loans are a viable option if your credit score is 580 or above. You can make a down payment of as little as 3.5% on the purchased price or appraised value. FHA loans are conclusive loans to minimum credit score recipients; we recommend you know your credit score before applying for an FHA loan. There are free credit monitoring services online to keep track of your credit score. The higher the score, the lower your interest could be on your loan.
The amount of debt you currently have will also play a role in applying for an FHA loan. When applying for an FHA loan, mortgage lenders will use the DTI (debt-to-income) to help determine the risk associated with you taking on another payment. Your debt-to-income ratio compares how much you owe each month to how much you earn. We suggest you add up all of your monthly bills and calculate your DTI ratio by dividing the sum of your monthly debts to your monthly gross income by using this calculator. NJ’s FHA loan requirement suggests that borrowers should ideally have a total debt-to-income ratio no higher than 43% of their income. There are only exceptions to this rule, such as cash reserves or a minimal increase in housing payment. In these exceptional cases, the DTI can be as high as 56% for FHA loans.
Establish Your Primary Residence
One of the FHA loan requirements in NJ is that you need to prove New Jersey is your primary residence. The property financed through the FHA loan must be owner-occupied. The FHA rule is active, so the loan beneficiaries do not use it for secondary purposes such as rentals or seasonal properties. The borrower must take possession of the home within 60 days after the mortgage closes and live in the house for most of the year.