How to Qualify for an FHA Loan in San Antonio: Requirements and Guidelines

If you are buying a home and looking for the right loan product to finance your purchase, you’ve come to the right place. You may have heard about FHA loans in San Antonio and are curious why they are a popular choice for Texan borrowers.

FHA loans are loan products insured by the FHA or Federal Housing Administration. They are popular in San Antonio since they offer Texans an opportunity to buy a new home even with lower credit scores and smaller down payments.

It’s also good to note that FHA loan limits in San Antonio are higher than in most counties in Texas, meaning home buyers can qualify for a higher loan amount.

Understanding credit score, DTI, Employment, Income, and Property Requirements is essential so you can easily navigate home-buying.

Read along as we provide the information needed to qualify for an FHA loan in San Antonio

Credit Score

As of the writing of this article, the minimum credit score required for an FHA loan in San Antonio, TX, is 580. This may vary depending on the lender, as some may ask for a score of up to 620. Your loan amount and down payment may also influence what minimum credit score your lender would require.

Credit history plays a significant role in determining your FHA loan eligibility. Lenders will look at your payment history, outstanding debts, and length of credit to further evaluate your creditworthiness.

A favorable credit history increases your chances of getting loan approval, while an adverse history can make it harder for you to qualify. If you qualify despite your negative history, you may have to pay higher interest rates and fees.

Here are some tips to improve your credit score and address your negative credit history:

• Pay your bills on time. Late payments can negatively impact your credit score, so you must start paying on time.

• Lower your debts. High debt levels may cause lenders to reject your loan application since they fear you cannot handle more debt. Try to pay down your debts as soon as possible.

• Remove errors on your credit report. Dispute any errors you may find on your credit report so that your scores may improve.

If you want to know if your credit score is enough to qualify for an FHA loan, contact us at New Horizons Lending of San Antonio.

Debt to Income Ratio

Your DTI or debt-to-income ratio is essential to your FHA loan approval since it helps lenders determine if you can repay your loan.

DTI is a comparison of your monthly debt payments and your gross income.

A high DTI ratio shows that you have a large amount of debt relative to your income, so there is a higher risk that you may default on your FHA loan.

In San Antonio, TX, the maximum DTI ratio allowed is 43% of your gross monthly income. Lenders will include your credit card, mortgage, car payments, plus other debts.

If you have high credit scores and can provide a higher down payment or show significant cash reserves, you may get approved even with a higher DTI ratio.

Here are tips on how you can improve your DTI:

• Pay off your current debts. Begin by paying off high-interest debts like credit cards, and personal, and car loans.

• Try to increase your income. A second job or side hustle can give you the extra cash you need and help lower your DTI ratio.

• Lower expenses. Cutting back on expenses, especially those that are unnecessary, can go a long way in reducing your DTI. Try to dine out less, delay vacations, or downsize to a smaller apartment.

• Avoid taking on new debt. While improving your DTI, refrain from taking on new debts since they can boost your DTI.

Employment and Income Requirements

To be eligible for an FHA loan in San Antonio, you must have a steady employment history or at least two years of consistent employment.

Lenders will ask for proof of income, including pay stubs, tax returns, and W2s.

The minimum income requirement may vary between lenders, but most will require a DTI ratio of no more than 43%.

For self-employed individuals, you must be in business for at least two years. Lenders will ask for your last two years of personal and business tax returns to calculate your monthly income.

You also need to submit a year-to-date Profit and Loss Statement.

If you are self-employed and need help navigating the home-buying process, you can work with an experienced and trusted FHA lender in San Antonio.

Property Requirements

The property must meet certain requirements to qualify for an FHA loan in San Antonio.

First, the San Antonio property should be your primary residence, and an FHA-approved appraiser should appraise it. There should be no health or safety hazards on the property, and it should meet the minimum property standards set by the FHA.

These include working plumbing, heating, electrical, and cooling systems. The property must have a solid roof, enough living space, and access to the street. It should also be far from flood zones or any other environmental hazards.

FHA loans can buy single and multi-family homes of up to four units, condos, and manufactured homes. However, they can’t buy investment properties, so no rental units are allowed.

Where to Find an FHA Mortgage in San Antonio

An FHA loan is a more affordable way to finance your dream home in San Antonio.

To qualify for an FHA loan in San Antonio, TX, you need to have a credit score of 580, have had steady employment for the past two years, have a DTI not higher than 43%, and must buy a property that meets the FHA requirements.

We understand that all these can be overwhelming, especially if it’s your first time buying a home.

Working with a knowledgeable mortgage broker at New Horizons Lending can help make the approval process faster and smoother.

Contact our loan experts so you can get started today!