FHA Loans
Oklahoma
Considering setting up roots in Oklahoma? The Sooner State is surprisingly diverse, boasting the largest Native American population in the contiguous United States; in fact, 16% of all Oklahomans identify as having Native American ancestry. 39 different tribes, including the Cheyenne and Arapaho, Chickasaw, Comanche, Shawnee, and Cherokee, all have vibrant communities throughout the area’s endless plains. Additionally, Oklahoma has a rich African American history, including a number of All-Black towns.
Choctaw County and Norman are two parts of Oklahoma that have experienced rapid population growth while emphasizing inclusivity; Norman had a perfect 100 score on the Municipal Equality Index last year, making it a warm and welcoming community for LGBTQ+ individuals. It’s no wonder that even though only 3.8% of Oklahoma’s population is LGBTQ+, 38% of queer individuals here are parents; it’s a great place to raise a family.
Tulsa and Oklahoma City boast trending neighborhoods with lively nightlife, top-rated restaurants, and a more inclusive way of life. Oklahoma City is also the hometown of the country’s first nonbinary state legislator, Mauree Turner.
Marginalized people throughout the United States, including in Oklahoma, face additional challenges when it comes to achieving homeownership, but you have many excellent choices. An FHA loan may be the best option if you’re worried about lower credit scores or don’t have substantial savings. FHA loans, insured by the Federal Housing Administration (FHA), offer a way to homeownership for many Oklahoma residents.
What Are FHA Loans?
If buying your home in Oklahoma has been on your mind, but you’re worried you don’t have a good enough credit score or can’t save up enough for the initial costs of buying a house, an FHA loan may be right for you. FHA loans are available through the Federal Housing Administration (FHA) and the United States Department of Housing and Urban Development (HUD), often with fewer requirements.
Since being created in the 1930s, FHA loans have helped more than 40 million Americans buy a home, particularly those who may have been turned away from other financing options. Over 30% of these mortgages are provided to people of color, which is much higher than for other mortgage products.
The Department of Housing and Urban Development has also been instrumental in pushing for equality in mortgage lending, including its groundbreaking rules in 2012 that required FHA lenders not to discriminate based on actual or perceived gender identity or sexual orientation. This means that those turned away from other financing due to discrimination often enjoy a better chance of success with federally-backed products.
FHA loans tend to be more lenient than conventional financing, offering financing to Oklahoma residents with less-than-perfect credit, first-time homebuyers, or those who cannot save up for the 5% down payment and closing costs necessary for a conventional mortgage. With no minimum or maximum income requirements, FHA loans are a great choice for those hoping to buy a home in Oklahoma.
While Oklahoma FHA loans are ideal for first-time homebuyers, they’re also available to various buyer types. The FHA program doesn’t limit program eligibility to first-time home buyers; other potential homeowners can qualify as well.
Benefits of Federal Housing Administration Loans in Oklahoma
Since Oklahoma FHA loans are backed by the Federal Housing Administration, they include various benefits that make homeownership an easier task. Here are a few advantages you can expect with an FHA loan.
Small Down Payment Options
FHA loans allow a down payment as low as 3.5%. However, eligibility for this interest rate depends on credit score. Lower credit may require 10% upfront.
Oklahoma does have assistance programs available, which may be open to some individuals. The Homebuyer Down Payment Assistance Program is available through the Oklahoma Housing Finance Agency. The REI Down Payment Assistance Program also helps Oklahoma buyers cover down payment and closing costs. Pride Lending will seek out any assistance that may apply to your circumstances, which includes nationwide DPA programs and those for more specialized situations.
Competitive Interest Rates
If you are interested in an FHA loan in Texas, then you should understand the benefits of this option. Here are a few advantages Texas homebuyers will experience with FHA loans.
Flexible Underwriting Guidelines
Underwriting is the process of evaluating a borrower’s risk. Since these borrowers are in more precarious financial situations, most applications are underwritten manually. What loan officers look for during the underwriting process is usually more flexible with FHA loans, whereas a conventional product would have more strict requirements.
Assumable Mortgages (Buyer Can Take over Existing FHA Loan)
An FHA mortgage on a house in Texas may be eligible as an assumable mortgage for a new buyer. Essentially, instead of taking out a new loan to buy a house, you take over the debt and payments for an existing FHA mortgage and become the new owner of the house. This is an excellent option for people with spotty credit reports.
FHA Loan Requirements
Every lender will have their own requirements for the FHA program. However, the typical Texas FHA loan requirements are as follows.
Minimum Credit Score
To qualify for an FHA home loan, you should aim for a credit score of 580 or better, as they will allow you to access the best rates and lowest upfront expenses. Lenders approving FHA mortgages may allow for scores as low as 500 if they offer at least 10% upfront.
Down Payment Amount
As mentioned previously, the minimum down payment for an FHA mortgage is 3.5% for those with a score of 580 or greater; those with scores between 500 and 579 must make a minimum payment of 10%. Although this is a low down payment and makes homes more affordable, it also means you would pay a private mortgage insurance premium (MIP).
We understand that even 3.5% can feel like a challenge depending on your personal finances, but Pride Lending is here to assist. We’ll connect you with local, state, and nationwide down payment assistance programs that can provide you with grants or second liens.
Numerous organizations in Texas offer assistance for those who can’t afford their upfront costs. For example, you may choose DPA programs from the Texas State Affordable Housing Corporation (TSAHC) or the Texas Homebuyer Program from the Texas Department of Housing and Community Affairs.
Debt-To-Income Ratio (DTI)
DTI compares your monthly debt payments to your gross monthly income. You divide your debt total by the gross income each month and then multiply by 100 to get a percentage. The typical lender will require a maximum DTI of 43%. Lenders can make an exception to a maximum DTI of 57% if the borrower has a good credit profile and provides a larger down payment.
Property Standards
Since the government is backing this mortgage, approval for the property type is needed before the loan is given. An appraisal will ensure the property is safe to occupy and up to standards for liveable conditions.
Additionally, this home must become your primary residence to qualify. However, it is possible to purchase a property with up to 4 units and rent up to 3 units, as long as one is used as your permanent residence.
Mortgage Insurance Premiums (MIP)
Everyone, no matter how much they put down, needs to pay the upfront mortgage insurance premium, which is 1.75% of the loan amount. You’ll also have to pay ongoing annual mortgage insurance premiums, though this may not be for the entire length of the loan.
If you make a 10% down payment or more, the MIP will be removed after 11 years, but if you make less than this, you’ll have MIP for the entirety of the loan. It’s also possible to refinance into a conventional loan once you have 20% equity, which would remove mortgage insurance.
Oklahoma FHA Loan Limits
FHA loan limits are the maximum loan amount a borrower can finance through the program. Each year, the National Housing Act sets maximum loan limits for conforming loans for the following year. The FHA loan limit is set at 65% of the annual loan limit and may vary depending on the state, county, and property type.
Most counties in Oklahoma have a maximum FHA loan limit of $498,257 for a single-family home. FHA loans also allow Oklahoma buyers to purchase multi-unit properties as long as one of the properties is their primary residence. The FHA loan limit on four-limit properties in Oklahoma is $958,350.
The FHA Loan Process
Ready to get started on purchasing your dream home in Oklahoma? Get started with the following steps:
See if you meet the requirements
Evaluate if you have a credit score of 580 or greater, a DTI of 43% or lower, and that you meet the down payment requirement of 3.5%. You may still qualify if you have a score as low as 500 or a DTI of 57%, but this may limit your choices.
Contact Pride Lending
When you reach out to us, we’ll begin your loan consultation by reviewing your options with you. FHA-approved lenders are qualified to give out these mortgages, and finding the right loan partner is the key to a positive homebuying experience.
Apply and get pre-approved
Pre-approval will prepare you for a smoother buying experience and help you understand what you can afford. You will need many documents for your application, including tax returns, paychecks, and bank statements.
Shop for the perfect home
Once you’ve been preapproved, we’ll discuss your budget with you and send your preapproval letter to your realtor. You can then begin shopping for the right property in your area.
Submit an offer
You and your realtor will decide on a competitive bid and submit the letter to the seller.
Complete the application
The application is called the Uniform Residential Loan Application and will include many of the same details you needed for preapproval; however, it will also include property details, which the lender will use to determine whether the property meets their standards.
Offer acceptance
The seller will decide if they find your offer acceptable. If they do, then you’ll sign a purchase contract that tentatively agrees to buying the home.
Inspection
While not strictly necessary for the program, the lender will likely require you to have the property inspected, ensuring that there are no significant issues.
Conditions
If you’re happy with the inspection results, then our team at Pride Lending will walk you through the sales contract and make sure everything is correct.
Underwriting
We will submit all the details that you have provided to the lender, whose underwriting team will now take over. They will carefully investigate each facet of the loan and ensure that there are no issues with you or the home.
Appraisal
An approved appraiser will evaluate the property to determine if it is a fair value, is safe to live in, and meets the property requirements for FHA home loans.
Loan approval
Once the appraisal is complete and the details of the loan have been reviewed, the lender will proceed with the final approval of your loan so that you can close on the transaction. We will schedule the closing date with you and the title company will send the information regarding how to pay the upfront expenses.
Close on the home
All the documents will be signed, the title will be transferred to you, the closing costs will be paid, and you will become the new owner of that house with the help of an FHA home loan.
Why Choose Pride Lending for Your Texas FHA Loan?
When you need the right team on your side to navigate the Texas FHA program, a loan officer from Pride Lending is ready to help. We serve all our clients with the same care, offering excellent customer service and a streamlined application process to make homeownership affordable and accessible.
Our team is composed of allies and members of minority communities, including LGBTQ+ and BIPOC individuals. We’re here to help everyone, no matter their identity, and serve as an advocate for those who may feel underserved by the mortgage industry.
First-time homebuyers and repeat buyers alike can work with Pride Lending whether they want to buy a single-family home or learn about an FHA reverse mortgage. Call us today at 725-231-0192 to learn more about Texas FHA loans.