Your eligibility for an FHA loan doesn't depend on a particular amount of income, but you must show that you have a stable work history. Your income should be able to be verified by sharing pay stubs, W-2 forms, federal tax returns and bank statements with your lender. Your lender may also request other examples of verification. FHA mortgage insurance premiums will be canceled after 11 years for most borrowers if they financed 90 percent or less of the value of the property; in other words, for those who have made a down payment of at least 10 percent and are keeping up with their monthly mortgage payments.
The conversion mortgage with home equity (HECM) is the most popular type of reverse mortgage and is also insured by the FHA. However, keep in mind that the long-term costs of an FHA mortgage will be higher due to the inevitable mortgage insurance payments. A high DTI ratio or a low credit rating may require a mortgage cash reserve, that is, money set aside to cover a minimum amount of monthly mortgage payments. Lenders were and continue to be willing to take the risk of granting FHA loans because of the mortgage insurance premiums that borrowers pay to protect against financial losses in the event of a mortgage default.
FHA-insured loans require mortgage insurance to protect lenders against losses that result from mortgage defaults. As with most home loans, there are FHA guidelines regarding credit rating, down payment, debt-to-income ratio (DTI), mortgage insurance and the actual property being purchased. You'll pay for two types of mortgage insurance to protect your FHA-approved lender against losses if you stop making your mortgage payments. The FHA insures each mortgage closed by an FHA-approved lender with an initial and annual mortgage insurance premium.
Even if your credit scores are above 620, you can compare how much you would pay in FHA mortgage insurance with conventional private mortgage insurance (PMI), especially if you don't have a 20% down payment.