How much do I need to have in savings before trying to qualify for FHA loan.?

Question

I am a first-time home shopper in So California. I have the credit score, yearly income to qualify for at least $100,000. There are lots of homes in this price range where I'm looking. So including all the application fees, closing costs, 3% down payment and other fees, I need a ball-park figure to have in savings before I actually apply for a loan.

Answer 1

There are a couple different factors that will come into play.

1) What kind of money do you have set aside? Even though you have the down payment and fees etc..covered, depending on your credit score they will want to see some sort of reserves such as a 401k or IRA. Something that you can tap into in case of an emergency.

2) What kind of bills do you have on your credit report? They will look at your debt to income ratio and would like to see this between 36% and 43%. The lower the better because you will be less of a risk.

3) Is the seller willing to pay any of the closing costs? If they are this will help reduce what you would have to bring to closing.

4) What fees are the lender charging as far as origination?

There are certain fee that goto into a high cost test. In the state where I originate loans those fees cannot execed 5% of the loan amount but with everything else involved it usually runs around 6%.

Answer 2

I just did an FHA loan for around $80k.  My closings costs and 3% down payment were about the same.  I think when all is said and done, I will be paying around $5,000 out of pocket.  For $100k, probably more like $6,000-7,000.

401k's and IRA's usually look good when submitting your bank info during escrow.  

Good luck!

Answer 3

There is a formula for the down pymt, but it's usually about 3%.  Then there is the closing costs if you can't get the seller to pay them.  You can get a gift for some of this.

Have you found a place in so cal for $100k?  I know our market sucks, but didn't know it was that bad.

Answer 4

All states are different with what are normal buyer/seller costs, but in my state 5% of the sale price would be plenty for downpayment, closing costs, & prepaids.  So, $5000 if no seller concessions.