FHA Home Loan Maryland

FHA Low money down Home Loans in Maryland

FHA Home Loan Maryland

The  (FHA) or Federal Housing Administration was formed in 1934 to protect lenders from borrowers who default on their mortgages but to improve the US housing market. The FHA and HUD provide lenders underwriting criteria that they will insure against making it easy for your lender to provide financing for your home in Maryland. An FHA loan has  great rates and low down payment options with more flexible credit score requirements. 

 CambridgeHomeLoan.com can help you secure the best rates and terms for and FHA loan in Maryland. The FHA  First Time Home Buyer Programs, programs in Maryland can help make your home purchase or refinance a breeze. 

FHA Loan in Maryland

The FHA insures FHA approved lenders that allow the banks to provide much more leverage than would be otherwise possible. The FHA loan in Washington DC requires only a 3.5% down payment in 2020. The initial down payment can be a gift from an acceptable source.

FHA Loans in Maryland range from $356,362 for 1 living-unit homes to $1,581,752 for four living-units. FHA Loan Limits in Maryland allow for  higher loan limits in what are considered high cost areas like Prince George’s and Montgomery counties. 

Super Jumbo loans up to $3 million dollars have their own programs for Maryland luxury buyers. Contact CambridgeHomeLoan.com FHA loan specialist for current guidelines.

FHA Loan Program

FHA program guidelines for Employment history and loan income requirements?

A two-year employment and income history in the same field is required for both employees and self-employed borrowers by way of  tax returns and W2s or 1099s and paystubs.

Borrowers that have court ordered child support or alimony must document receipt of the income for a minimum of three (3) months and prove that the receipt of that income will continue for at least three (3) years.

FHA Loan Credit Requirement

Minimum credit score required for FHA loans and first time home buyers in Maryland?

A mortgage or risk based Bank FICO with middle credit score of at least 580. During Covid this has gone to a FICO of 620. 

Regardless of what your current credit scores is, the FHA still evaluates does an evaluation of credit history to determine if borrower gets approved eligible findings that meet FHA approval guidelines for Maryland.  Regarding FICO scores, It is also important to note that your consumer FICO is not the same as your mortgage FICO, risk based or Bank FICO score. Banks use a different calculation and you should contact your loan officer to understand the difference between the consumer and bank scores.

FHA Home Loan Maryland Maximum Seller Credit Allowed

What is the maximum seller contributions/concessions for FHA loans?

A Seller Credit or seller contribution is limited to  6% of the sales price. For VA Home Loans the maximum seller contribution is 4%. It is always a good idea to try and get the maximum seller contribution that you can 

How Long Do I have to wait after a bankruptcy to qualify for an FHA Loan in Maryland?

If your Chapter 13 bankruptcy was discharged 2 or more years ago you may still be eligible for an FHA loan program in Maryland.  For Chapter 7 it may take 3 year before you can qualify.

Are Charge off Accounts included in my debt to income?

Charge-off accounts are not included in borrowers’ debt.

How does FHA treat collection accounts on my credit report?

For non-medical collection accounts when the cumulative outstanding balance is greater than $2,000 borrower may either pay-off the balance or, for the purpose of debt-to-income ratio (DTI), provide proof of a payment plan. If neither are an option, the lender must use 5% of the outstanding balance and include it in the borrower’s DTI calculation.

Can I still qualify for an FHA loan in Maryland if I have delinquent child support

Delinquent child support must be paid current or in a payment plan.

What if my federal tax debt is delinquent?

Borrowers that have delinquent tax debt are ineligible unless they are currently in payment plan.

How are tax liens handled in an FHA Loan?

Borrowers that have delinquent tax debt are not eligible unless they are currently in repayment plan. Repayment of tax liens are not required to be paid in full if documentation is provided showing that the borrower is in a valid payment plan.

The following is required:

  1. The borrower must have made a minimum of 3 months of scheduled payments and documentation of the payments is required.
  2. The payment must be included in the DTI / Debt to income calculation.
  3. The borrower cannot prepay the payments to meet the 3-month payment requirement NOTE: Borrowers with delinquent taxes may or may not have a tax lien. Borrowers currently in a repayment plan, and the IRS has not filed a tax lien, are not required to meet the minimum 3-month payment requirement. The payment to the IRS will be included in the DTI calculation.

What are the FHA loan guidelines for borrower with previous deed-in-lieu?

Foreclosure waiting period is measured from the date of title transfer. Three (3) years must have elapsed from the time title transferred. If the foreclosed loan was an FHA loan, the 3-year waiting period is based on the date the FHA claim was paid (e.g. foreclosure 11/12/14, FHA claim dates was 7/12/15, the 3-year waiting period ends 7/13/18).

Borrowers with foreclosure/Deed in Lieu within 3 years of case number assignment that was due to documented extenuating circumstances may be eligible if the borrower has re-established good credit since the foreclosure. A downgrade to manual underwriting is required. If the foreclosure was included in the bankruptcy, the foreclosure waiting period still applies. HUD treats the foreclosure and Bankruptcy  independently, not as a single event.

What are the FHA guidelines in Maryland for borrowers with previous short sale and/or pre-foreclosure?

The three-year waiting period from date of title transfer still applies unless they were current at the time on short sale. Speak to your loan officer for specifics.

What are the current FHA guidelines for Debt-to-Income ratio?

The Maximum debt-to-income (DTI) ratio varies based on overall credit history and assets.  Typically, the DTI cannot exceed 45% of the borrower’s gross income.  However, in some cases borrowers with as high as 54.9% DTI may be eligible and in other cases borrowers may be capped at 43% DTI. Due to our volume size we can allow for higher DTI which enables you to receive a higher loan amount even if you have significant debt.

How does FHA treat  student loans in defferrment?

Borrowers with student loans that are in deferment or not fully amortized will be required to calculate 1% of the outstanding balance as minimum monthly payment that will be added in their debt-to-income ratio (DTI) calculation.

FHA Property Types For Maryland and Nationwide

What are FHA Loan property types?
  • Single-family Homes
  • Two to Four planned unit development (PUDs)
  • Condos
  • Modular or pre-fabricated properties (single-unit only)
  • Mixed use must conform to residential nature of the neighborhood, and commercial use cannot exceed 25% of the gross living area.

Maryland HomeReady Mortgage
Low Low down payment HomeReady® Home Loan

HomeReady Mortgages in Maryland confidently serves today’s low-income credit worthy home borrowers.

The HomeReady® loan is a low down payment 3% down home loan. Credit scores however are higher than FHA loan with starting requirements for a FICO at 620  vs 580. This may be offset by the lower capital contribution required of 3% vs 3.5%.  Cash for a down payment can come from multiple sources including grants, gifts and community seconds with no minimum requirement to use your personal funds.  The program is for the most part used for developer built new home loans.

The HomeReady® home loan mortgage program requires you to take a quick course about home ownership. You can check  the education requirements for this program HERE.

EXPERT FIRST TIME HOME BUYER GUIDE Maryland