FHA Loan Requirements in Virginia: A Complete Guide

Getting an FHA loan is an excellent way for many Virginia homebuyers to purchase their first home. FHA loans require lower credit scores and down payments than conventional mortgages, making them more accessible. However, FHA loans do have eligibility requirements you must meet to qualify.

In this complete guide, we’ll walk through all the key FHA loan requirements in Virginia. We’ll cover

FHA credit score guidelines
Down payment amounts
Debt-to-income ratio limits
Types of properties you can buy
Mortgage insurance needs
And more

Follow along to learn everything you need to know to see if you’re eligible for an FHA mortgage in Virginia.

Overview of FHA Loans

Before diving into the specifics, let’s review what an FHA loan is. FHA stands for Federal Housing Administration – this government agency insures loans made by private lenders

Because the FHA guarantees these mortgages, lenders can offer more flexible terms. Borrowers have to meet FHA’s criteria, but they are more lenient than conventional loans.

Some key benefits of FHA loans include:

Lower credit score requirements – You may only need a 580 FICO score for the best terms
Small down payments – Minimum down payment is just 3.5% of the purchase price
Low monthly mortgage insurance – Upfront and annual MIP is competitive
More flexible debt-to-income ratio – DTI cap of 57% with a qualifying score

These features allow more Virginia residents to qualify and make homeownership attainable. Next, let’s look at the specific FHA eligibility rules.

FHA Credit Score Requirements in Virginia

Your credit score is one of the most important FHA loan qualifications. The higher your score, the better mortgage rate and terms you can get.

Here are the minimum FICO credit score requirements for FHA loans in Virginia:

580 credit score – Minimum score to qualify for max financing
500-579 credit score – Eligible but required to put down 10%
<500 credit score – Not eligible for FHA financing

As you can see, the lowest credit score for an FHA loan in Virginia is 580. This allows you to make a minimum 3.5% down payment.

With a score between 500-579, you can get approved but must put down 10%. And anything under 500 won’t qualify.

Aim for at least a 580 FICO score to get the best FHA mortgage rates and terms. This will save you thousands over the loan repayment period.

Down Payment Amounts for FHA Loans

Coming up with a large down payment is one of the biggest hurdles for first-time Virginia homebuyers. FHA loans make this much easier.

Here are the FHA down payment requirements in Virginia:

3.5% down payment – For borrowers with a 580+ credit score
10% down payment – If you have a 500-579 credit score

So with a 580+ credit score, you only need 3.5% of the purchase price for your down payment. On a $300,000 home, that’s just $10,500 versus $30,000 for a 10% conventional down payment.

To get the 10% down payment, you’d need a score between 500-579. This also comes with a higher interest rate.

Aim for the lowest 3.5% down if possible. This helps you buy sooner and avoids private mortgage insurance.

Debt-to-Income Ratio Limits

Your debt-to-income (DTI) ratio compares your total monthly debt payments to your gross monthly income. FHA has maximum DTI limits you must meet:

Baseline DTI limit is 57% – For most borrowers
DTI limit of 55% – If you have poor credit history
DTI limit of 47% – For borrowers with a credit score <620

So for most borrowers, your DTI can be up to 57% to qualify for an FHA loan in Virginia. But it drops to 55% or lower with poor credit or scores below 620.

When calculating your DTI, make sure to include all monthly debts like:

Housing payments
Minimum credit card payments
Auto, student, and personal loans
Child support or alimony

Keeping your DTI low improves your chances of approval for an FHA mortgage.

Types of Homes Eligible for FHA Loans

You can use an FHA loan to purchase several types of residential properties in Virginia. FHA requirements allow:

Single-family homes – 1-unit detached homes or townhouses
Duplexes – 2-unit properties where you live in one unit
Triplexes – 3-unit properties where you live in one unit
Fourplexes – 4-unit properties you occupy one unit

Mobile homes and manufactured housing may also qualify if built on a permanent foundation and meet HUD requirements.

You can also use FHA financing to buy a fixer-upper home in Virginia. These properties just need to meet FHA minimum property standards after repairs are completed.

Condos, co-ops, and vacation homes don’t qualify for FHA mortgages. Stick to standard 1-4 unit residential properties.

Mortgage Insurance Requirements

All FHA loans require you pay mortgage insurance premiums (MIP). This protects the lender against default.

There are two types of MIP charges:

Upfront MIP – 1.75% of loan amount, paid at closing
Annual MIP – 0.45% – 1.05% of loan amount, paid monthly

On a $300,000 loan amount, upfront MIP would be $5,250. The annual MIP could range from $1,350 to $3,150 per year.

You pay mortgage insurance for the life of an FHA loan. However, once you reach 78% loan-to-value ratio, annual MIP drops off.

MIP costs are still very affordable compared to conventional loans. And it allows you to buy with a low down payment.

Eligible FHA Loan Terms

FHA programs give you multiple loan term options:

30-year fixed-rate – Most popular term nationally
15-year fixed-rate – Higher monthly payment but save on interest
5/1 adjustable-rate – Fixed for 5 years then adjusts annually

The 30-year fixed rate is what most opt for. It provides lower monthly payments so you can qualify for more home.

The 15-year term comes with higher payments but you repay the loan faster and save on interest. Adjustable-rate mortgages come with more risk when rates adjust up.

First-time buyers often prefer the 30-year fixed when buying with an FHA loan. But run the numbers on all options before deciding.

Steps to Getting an FHA Mortgage

If you meet the above FHA loan requirements, here are the steps to getting an FHA mortgage in Virginia:

Check your credit score and report – Ensure no errors dragging your score down
Get pre-approved – Gives an estimate of your affordability and interest rate
Make an offer – Locks in the purchase price if accepted
Complete loan application – Provides income, employment, and asset documentation
Home appraisal – Ensures property meets FHA standards
Underwriting – Final verification you meet FHA financing requirements
Closing – Sign loan documents and provide your down payment

The entire process takes 30-60 days on average. Having a complete loan application speeds things along.

Get pre-approved early so you know your price range when making an offer. This makes for a smoother buying journey.

Alternatives if You Don’t Qualify for FHA

While FHA loans are accessible, you may not meet the requirements in some cases. Here are some alternatives if you don’t qualify:

Conventional 97 – 3% down payment with flexible credit and income requirements

VA loans – Zero down payment option for veterans and service members

USDA loans – Zero down loans for low-income borrowers in rural areas

Down payment assistance programs – State and local programs help with your down payment and closing costs

FHA 203(k) rehab loan – Finance up to 35% in renovations needed to meet FHA standards

Improve your credit – Take steps to increase your score until you meet requirements

Save up a larger down payment – Up your down payment if you don’t meet debt-to-income limits

Talk to a few lenders to go over all your options if you don’t qualify for an FHA loan right away. Don’t give up on homeownership!

The Bottom Line

FHA loans open up homebuying opportunities across Virginia thanks to low down payments and flexible underwriting. Just be sure you meet all the FHA eligibility standards covere

What is a Virginia FHA Loan?

Building your dream life is hard, but New American Funding is here to help. For a lot of people, owning a home is large part of the American dream life. If your dream home is in Virginia, but you’re worried about your credit score or affording a high down payment, an FHA loan may be right for you. FHA loans were created in 1934 by the Federal Housing Administration. They are a valuable resource designed to help borrowers with less-than-perfect credit purchase a home. Since 1934, FHA loans have helped over 40 million people become homeowners.

The FHA is governed by the U.S. Department of Housing and Urban Development (HUD). This means FHA loans are guaranteed by the United States government. This makes FHA loans attractive to mortgage lenders because there is less risk of the lender losing its money. The FHA insures the loan and does not lend money directly to the borrower.

FHA loans are one of the best options available for first-time homebuyers. They are more accessible than Conventional loans. This makes them popular with a wide range of borrowers.

With lower down payments, lower credit requirements, and the option for financial assistance, buyers from all financial backgrounds may be able to qualify.

Get answers to your questions about Conventional loans vs FHA loans here.

Virginia FHA Loan Requirements

There are many different types of FHA loans available in Virginia. Requirements are different for each loan. Some of them can be stricter than those of Conventional loans. Contact your lender to discuss loan specific requirements. Here are some general FHA loan requirements for Virginia.

A credit score of 580 or higher: A lender may accept credit scores of 500-579 under certain conditions. A credit score lower than 580 will require a larger down payment.
The ability to pay a 3.5%-10% down payment: The percentage you will pay will be calculated according to your credit score and other factors. The borrower’s credit score must be 580 or higher to have a down payment of 3.5%
Minimum of two years employment: Must have verifiable, steady, and consistent income. You will need documentation. It can include tax returns, pay stubs, or W-2s. This requirement is the same for borrowers who are employees and those who are self-employed.
Mortgage insurance: The ability to pay the mortgage insurance premium (MIP) is required. The dollar amount of MIP will be calculated based on the amount of the loan. However, all FHA loans will require borrowers to pay an upfront MIP of 1.75%. This is in addition to monthly mortgage insurance, which is required for the life of the loan.
Higher home inspection standards: Property must pass an FHA-specific appraisal.
Loan must be for a principal residential property: FHA loans cannot be used for rentals, investing in properties, or vacation homes. They are also not available for business properties.
A debt-to-income ratio of less than 57%: A person’s debt-to-income (DTI) ratio is the percentage of their gross monthly income they spend to cover debts. Debts can include student loans, credit cards, and any type of federal debt.

To qualify for an FHA loan, you cannot spend more than half of your gross income on debt. There are some exceptions. In general, however, many lenders in Virginia will want to see your debt-to-income ratio be no greater than 43%.

Virginia FHA Loans – How to Qualify

FAQ

What will disqualify you from an FHA loan?

The three primary factors that can disqualify you from getting an FHA loan are a high debt-to-income ratio, poor credit, or lack of funds to cover the required down payment, monthly mortgage payments or closing costs.

What are the minimum requirements for an FHA loan?

Each requirement is explained in more detail below, but here is an overview of the FHA’s minimum mortgage requirements: Credit score: 500 (10% down payment), 580 (3.5% down payment) Down payment: 3.5% (score 580 or higher), 10% (score of 500 to 579) Debt-to-income ratio: 43%

Is it harder to qualify for an FHA loan?

While conventional mortgages usually require a credit score of 620 or more, FHA loans are open to borrowers with credit scores as low as 500. You don’t need a big down payment. If your credit score is 580 or more, you could qualify to put down just 3.5%. Interest rates are competitive.

What are the income requirements for a FHA loan?

FHA Income Requirements Your eligibility for an FHA loan doesn’t hinge on a particular income amount, but you must prove you have a steady employment history. Your income must be verifiable by sharing pay stubs, W-2s, federal tax returns and bank statements with your lender.

What are the Virginia FHA loan requirements?

Here are some key Virginia FHA loan requirements to keep in mind: Credit score: The standard minimum credit score for most lenders is typically 580 to qualify for the 3.5% down payment option. Scores between 500 and 579 might still qualify but may require a larger down payment. Griffin Funding will accept credit scores as low as 550 for FHA loans.

How much is an FHA loan in Virginia?

You can get an FHA loan in Virginia with a credit score as low as 500. FHA loan limits vary by county and range from $498,257 to $1,149,825 for single-family homes in Virginia. Here’s what you need to know about FHA loans and their limits in Virginia before you apply. How are FHA loan limits determined?

Can I get an FHA loan in Virginia?

To qualify for an FHA loan in Virginia, your home loan must be below the local FHA loan limits in your area. For 2024, the maximum loan limit in Virginia is $498,257 for a single-family home and $2,211,600 for a four-plex. Limits varies by county. The minimum loan limit is $5,000. Loan limits vary by county and home size.

What are FHA loan limits in Virginia?

FHA loan limits vary by county and range from $498,257 to $1,149,825 for single-family homes in Virginia. Here’s what you need to know about FHA loans and their limits in Virginia before you apply. How are FHA loan limits determined? Each year, the FHA sets a maximum loan amount that it will insure within a given area.