• The Federal Housing Administration backs mortgages in an effort to help people to own their own homes. In order to lower the requirements most lenders have for mortgages, the FHA guarantees that the money will be repaid, even if the borrower defaults. This gives the banks more confidence in making loans. However, there are still minimum requirements that must be met.
  
  

Credit Requirements

• The FHA does not require that you have a credit score in order to apply for a FHA-backed mortgage. This allows people who may not have borrowed money before or had credit cards in the past to still be considered. If you do have a credit score, your score should be at least 620. Regardless of your credit score, you cannot be approved for an FHA loan if you had a bankruptcy in the past two years or had your home foreclosed on in the past three years. If you do not have a credit score, you need to be able to show a consistent record of paying other bills, such as rent and utilities, on time.
  
  

Income Requirements

• To qualify for an FHA loan, you should have had a steady job, preferably with the same company, for at least the past two years. The FHA also looks at how your monthly income compares to your potential mortgage payment and your other debt obligations. The front end ratio simply divides your mortgage expenses by your total income and the result should not be more than 29 percent. Your back end ratio divides all debt payments you are required to make each month, including your potential mortgage payment, by your total income and the result should not exceed 41 percent.
  
  

Financing

• The FHA requirements for down payments are significantly lower than the down payment requirements for a conventional loan. While conventional loans can require up to 20 percent, FHA loans may be approved with as little as a 3.5 percent down payment. In addition, you are not required to have a savings or checking account with a certain amount of money in it.