What are the eligibility requirements for FHA loans?

FHA loans, or Federal Housing Administration loans, are designed to help low to moderate-income borrowers qualify for a mortgage. The eligibility requirements reflect this intent and include a minimum credit score, proof of stable income, and the condition that the property purchased with the loan must be used as a primary residence.

The minimum credit score requirement helps lenders gauge the borrower's ability to repay the loan, while proof of stable income demonstrates the borrower’s financial capability to cover mortgage payments consistently. Additionally, requiring that the property be the borrower's primary residence ensures that the FHA program is used for owner-occupied housing, which supports the intent of fostering homeownership.

The other options do not align with the actual requirements set for FHA loans. High net worth and having a low debt-to-income ratio, while beneficial in general loan terms, do not specifically apply to FHA loans, where a broader range of borrowers may qualify. The concept of no prior credit history and cash purchases being a requirement does not fit the FHA's framework, which actively seeks to aid those with less established credit histories. Lastly, while first-time homebuyers may benefit significantly from FHA loans, they are not the only applicants eligible; repeat buyers can also access these loans under specific conditions.