With one of the country’s lowest unemployment rates and a cost of living about 10% lower than the national average, it’s no wonder Iowa’s population has grown over the last decade. Owning a home is a realistic goal for many Iowans, and rightfully so as homes have appreciated since 2010 in the Hawkeye State.
Deciding to purchase a home is exciting, but navigating all of your home financing options can be an overwhelming journey. Luckily, an FHA loan in Iowa can simplify the process. Continue reading to learn the benefits and why an FHA loan may be right for you.
Why Consider an FHA Loan in Iowa
If you’re looking for a calm and safe place to live, Iowa is the spot for you. With crime rates lower than the national average, and weekly wages higher, you can’t go wrong when digging your roots in here. Many Iowans are turning to FHA loans to finance their new homes, and as of April 2019, the total value of FHA loans in Iowa was $44 million!
Benefits of Using an FHA Loan in IA
- FHA loans are great for first-time homebuyers, especially those who can’t or don’t want to make a large down payment.
- FHA mortgage rates are typically lower than conventional mortgage rates.
- FHA down payment and credit score requirements are typically lower than conventional loans
- Sellers can contribute up to 6% of the purchase price or appraised value (whichever is less) towards the buyers’ closing costs.
- FHA loans are assumable.
FHA Loan Limits in Iowa
Before you begin looking for you home, you need to have an idea of how much you can borrow. In Iowa, a baseline limit of $498,257 applies, but can vary depending on your location. This is done to ensure those looking to buy a house in an area with a high cost of living can still obtain a home. However, since no areas have a high cost of living in Iowa the baseline limit applies statewide.
Are You Eligible for an FHA Loan in IA?
You may be eligible for an FHA loan, if you:
- Have 2 years of steady employment, preferably with the same employer.
- Have had steady income (or increasing income) in the past two years.
- Have had less than two 30-day periods of late payments on your credit report.
- Have declared bankruptcy no less than two years ago and have maintained good credit since.
- Have not been a party in a foreclosure for at least three years and have maintained good credit since.
- Anticipate your mortgage payment will be equal to or less than 30% of your gross income.
What Do You Need to Apply for an FHA Loan IA?
Buyers must be able to provide the following information and documents as requested by lenders:
- The addresses of all your residences over the past two years.
- The names of your employers over the past two years.
- W2's for the past two years and current paycheck stubs.
- Your current gross monthly salary.
- Your Social Security Number.
- Names, addresses, and account numbers with balances on all checking and savings accounts.
- Addresses and loan information of any other real estate you owned.
- Self-employed individuals will need to provide personal tax returns for the past two years and a current income statement and balance sheet for the business.
- Students will need to provide evidence of enrollment. If you have student loans, you need to provide verification information.
Note: Facts and figures sourced from the latest statistics available at the time of this writing including data from the United States Department of Labor, United States Census Bureau and the United States Department of Housing and Urban Development.