Everything You Need to Know About FHA Loan Requirements in Georgia

Buying a home is an exciting milestone, but qualifying for a mortgage can be stressful. If your finances are less than ideal, an FHA loan may be your ticket to homeownership in Georgia. These government-backed mortgages have low down payments and flexible credit requirements.

In this comprehensive guide, I’ll explain FHA loan requirements in Georgia, including:

• Down payment amounts
• Credit score minimums
• Debt-to-income ratios
• Types of eligible properties
• Occupancy rules
• And more!

By the end, you’ll understand exactly what it takes to qualify for an FHA mortgage near you Let’s get started!

Down Payment Requirements for FHA Loans in Georgia

The biggest advantage of FHA loans is the low down payment, making them ideal for first-time homebuyers without much cash. Here are the current requirements:

• 3.5% down: The minimum down payment is just 3.5% of the purchase price. On a $250,000 home, that’s only $8,750.

• No down payment: Qualified applicants can use a family gift or down payment assistance program to cover the down payment.

• Closing costs: You can finance closing costs and prepaid items into the loan amount.

Coming up with even a 3.5% down payment can be a stretch. But FHA allows gifted funds and secondary financing, which makes these mortgages accessible to more borrowers.

FHA Mortgage Credit Score Requirements in Georgia

FHA is more flexible than conventional loans when it comes to credit scores. Here are the current minimum requirements:

• 500 credit score: The lowest minimum FICO score is 500 for 3.5% down.

• 580 credit score For the best terms and lowest mortgage insurance, aim for at least 580

• No minimum spouse score: Only one borrower needs to meet the score requirement.

• Non-traditional credit: Those without sufficient credit history can qualify with non-traditional credit, like utility bill payments.

So even if your score is on the lower side you can likely still qualify for an FHA loan in Georgia. Focus on paying down balances and resolving errors to boost your score.

Debt-to-Income Ratio Limits for FHA Loans

Part of mortgage qualification is making sure your income is enough to comfortably cover the new housing payment and other monthly debt obligations. Here are the DTI requirements for FHA loans:

• 31% DTI on housing: No more than 31% of gross monthly income can go toward the mortgage payment, insurance, HOA fees, and property taxes.

• 43% DTI on total debt: Total monthly debt payments, including housing costs plus credit card bills, student loans, car loans, and so on, cannot exceed 43% of income.

• Compensating factors: You may exceed 43% DTI with compensating factors like significant assets or a down payment of at least 10%.

• Non-occupant co-borrowers: Adding a non-occupant co-signer with higher income can help you meet DTI limits.

While DTI requirements are firm, lenders have some flexibility if you have a good explanation for high debt. Talk to your loan officer about your specific situation.

Types of Homes Eligible for FHA Loans in Georgia

FHA mortgages can finance a wide variety of residential properties:

• Single-family homes like detached houses, townhomes, row houses, and condos

• 2–4 unit properties if you plan to live in one unit

• Manufactured and modular homes that are permanently affixed to the foundation

• Mixed-use properties with a business use for up to 25% of the space

• Homes needing renovations if funds to complete repairs are set aside in an escrow account

You cannot use FHA financing to purchase co-ops, timeshares, recreational vehicles, or commercial properties. All homes must pass an FHA appraisal to ensure they are habitable, safe, and structurally sound.

Occupancy Rules for FHA Mortgages in Georgia

To qualify for an FHA loan, you must plan to occupy the home as your primary residence. Here are the occupancy requirements:

• Owner occupancy: At least one borrower must live in the home full-time within 60 days of closing and occupy for at least a year.

• No rental income: On 2–4 unit properties, rental income cannot be considered when qualifying for an owner-occupied FHA loan.

• Exceptions: Active duty service members and eligible HUD employees do not need to occupy the home.

FHA loans are only for primary residences, not vacation homes or investment properties. Violating occupancy requirements can trigger mortgage insurance cancellation.

Loan Limits for FHA Mortgages in Georgia

The FHA insures mortgages up to set loan limits that vary by metro area. Here are the current 2024 limits for Georgia:

• Lowest limit: $498,257 (non-metro counties)

• Highest limit: $1,249,550 (metro Atlanta counties)

• Number of units: Limits are higher for 2-4 unit properties.

• High-cost areas: Expanded limits in select high-cost counties.

FHA will only insure mortgages that fall under the applicable limit for the area. Loan limits tend to rise slightly each year based on housing costs.

Seller Contribution Limits for FHA Loans

The seller is allowed to cover some buyer closing costs and prepaid expenses. Here are the rules on seller concessions:

• 6% limit: Seller contributions cannot exceed 6% of the purchase price.

• Pay down costs: The funds must be used to pay for actual closing fees and prepaids.

• Increase down payment: Excess funds must go toward the buyer’s down payment.

Large seller credits used to be more common, but FHA cracked down on the practice. Make sure any contributions fall within current guidelines.

Mortgage Insurance Rates for FHA Loans

Borrowers with less than 20% down pay an upfront and annual mortgage insurance premium. Here are the current rates in Georgia:

• Upfront MIP: 1.75% of the loan amount

• Annual MIP: 0.45% to 1.05% of the loan amount

• Duration: Mortgage insurance is required for the life of the loan on mortgages over 15 years, or for 11 years on mortgages 15 years or less.

• Cancellation: MIP cancels once you reach 22% home equity and meet seasoning requirements.

FHA mortgage insurance costs are baked into your interest rate. But they can still add a significant amount over the life of the loan.

Private Mortgage Insurance Options for FHA Loans

Borrowers have two options for paying the annual MIP on an FHA mortgage:

• Monthly: The lender rolls MIP into the monthly payment.

• Split Premium: Pay the first year upfront to lower the interest rate, then pay annually.

Split premiums have modest savings on interest but require more cash. Monthly MIP offers convenience since it’s built into the payment. Shop around for the best rates.

Federal FHA Loan Limits for Georgia Counties

FHA mortgages have maximum loan limits set by federal law. Here are the 2024 FHA limits for counties in Georgia:

See the HUD website for full details on limits in all Georgia counties. The highest limits are in the metro Atlanta area. Make sure your FHA mortgage amount falls under the limit for your specific area.

How to Find an FHA Lender in Georgia

HUD oversees and insures FHA loans, but you work with private FHA-approved lenders for financing. Here’s how to find one:

• Check HUD’s website: Search the full directory of lenders in Georgia who offer FHA mortgages.

• Ask for referrals: Talk to friends and your real estate agent for lender recommendations.

• Compare quotes: