FHA loans are a popular choice for many homeowners because they assist people with low incomes to buy and refinance their houses. However, there are specific eligibility requirements to qualify for an FHA loan. Sometimes, the loan gets rejected due to certain reasons leaving the owner in utter surprise. 

So, what factors determine your disqualification from FHA loans in Myrtle Beach, SC? Continue reading the post to learn more about it.

Potential reasons for an FHA rejection:

Below listed are the most popular reasons why homeowners might be denied FHA loans. Still, there are several factors to consider until final approval for the loan. Keep these points in mind as a way to better your position or improve your standards before applying for a loan. 

• You have a bad credit history 

Typically, bad credit indicates a poor credit score. If you are looking for loans, having a good credit history can give you many advantages. And, the opposite applies to a bad credit history. Hence, learn ways to improve your credit score if you are dealing with poor credit. 

According to the government, a credit score of 500 or even above is the best spot to get any kind of financial help from lenders. The same applies to FHA loans as well. When your credit score is 500 or above, you can get an FHA loan with just a 10% down payment.

If you have a 580 or even higher credit score, the down payment will be around 3.5%. Moreover, the criteria vary from one lender to another. In short, each lender will have their standards. Sometimes, it will be higher than what the government offers. Several lenders want at least a 600 credit score to proceed with FHA Myrtle Beach, SC. 

• You have too much debt

If you have debt way above a certain level, you may be denied an FHA loan. This is measured by your debt-to-income ratio. When it is high, lenders will understand that you are not a good fit for the FHA loan. 

According to the government, the total debt to income can be accepted when the mortgage payment including monthly obligations doesn’t exceed 43% of the gross income. 

Most people aren’t aware of the debt-income ratio. So, if you fall in this category, chances are that most mortgage companies along with other private lenders will be happy to provide you with a VA loan in Myrtle Beach, SC.

However, not the same rule applies to other regions and lenders. Some lenders may need borrowers to provide at least 50% or even higher to get approval for the FHA loan. Hence, do your research before choosing a lender.

• You don’t have sufficient income

The reason is pretty much similar to the above one but borrowers must have an adequate amount as a down payment and other costs. This is another major cause for the denial of an FHA loan. 

The down payment of 3.5% may lure many borrowers to seek an FHA loan. But when certain criteria as mentioned above fail to meet, the percentage of the down payment will increase significantly. 

Resources:  https://www.localbusinesslisting.org/brickwood-mortgage-inc

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