Compare FHA Mortgage Rates Today

Find and compare current FHA mortgage rates with lenders in your area. Federal Housing Administration loans have a lower down payment and credit requirements, /which can help first-time buyers and borrowers with credit problems.

How do you find the current FHA interest rates?

The Mortgage Rate Tool helps you find competitive FHA mortgage rates that suit your needs. In the “Refine Results” section, provide some details about the type of loan you are looking for (select “Yes” under “FHA loan eligible?”). You will then receive a personalized interest rate offer. sometimes without providing personal information. From there you can start getting your FHA loan and start bidding. It’s easy.

Do FHA Loans Have Lower Interest Rates?

An FHA loan is a type mortgage that is insured by the Federal Housing Administration. FHA loans have relaxed lending standards to help borrowers who do not qualify for a conventional mortgage but generally do not have a lower interest rate. Creditworthiness has a greater impact on mortgage rates than the type of loan. If you have a high credit score, your FHA loan rate will likely be lower than that of someone with a low credit score.

What is a good FHA interest rate?

There are many factors that influence the mortgage rate offered to you, from forces that are practically beyond your control (like the economy) to your personal financial information. The best way to find out if they are giving you a good interest rate on FHA loans is to apply to multiple lenders. This allows you to compare loan offers and see which one offers the best combination of interest rate and fees.

 

Do FHA interest rates vary depending on the lender?

Yes, FHA loan rates vary by lender, so it can pay off to shop around. When you’ve found a few lenders that are right for you, start researching each one.

Once approved, each lender will provide you with a loan estimate form. This way, in addition to comparing FHA mortgage rates, it allows you to compare origination costs, closing costs, and whatever else you pay over the life of the loan. When you compare the credit ratings of more than one lender, you can be sure that you are getting the right interest rate and the right loan for your situation.

Are FHA Loans Fixed Rate?

Although the vast majority of FHA loans are 30-year fixed-rate mortgages, other options are available including short-term fixed-rate mortgages and adjustable-rate mortgages (ARMs). Fixed-rate mortgages have become much more common in recent years as home buyers seek low-interest rates. However, if you don’t plan on staying home for a long time, an MRA might be worth checking out.

Pros and Cons of FHA Loans

Benefits

An FHA loan is a great option for first-time buyers who need a small down payment. If you qualify, you can get a mortgage for just 3.5% off.

FHA loans are also beneficial for those with poor or damaged credit. Some FHA mortgage lenders allow credit scores as low as 500, although a higher score lowers your down payment requirements. If you’ve had financial troubles in the past, or just didn’t have the time to build a solid history of on-time payments, an FHA loan could be the answer to your mortgage needs.

FHA loans can be used to purchase not only single-family homes, apartment buildings, townhouses, and condominiums, but also manufactured homes and mobile homes. A variant of the FHA loan called 203 (k) allows you to finance both the purchase of a home and the necessary renovations with the same mortgage.

Disadvantage

The main disadvantage of FHA loans is that you have to pay for FHA mortgage insurance. This protects the lender’s share of the loan in the event of default, but the premiums are added to your monthly payments. And unlike private mortgage insurance for a traditional loan, FHA mortgage insurance cannot be canceled.

Homes and condos purchased with FHA loans must meet the minimum HUD ownership requirements. 

How to Find an FHA Approved apartment

The HUD Finder can help you find FHA approved condominium complexes. However, you can also get an FHA loan on a condo that is not in an approved development.

A Federal Housing Administration-approved home can be a great alternative if you don’t want to find or downsize an affordable, FHA-approved home (and want someone else to do the gardening!) In a competitive market.

Here are some shortcuts to get you started on your FHA approved apartment search.

Find FHA Approved Condos with the HUD Finder

The FHA is a program of the US Department of Housing and Urban Development. FHA loans are often particularly attractive to first-time buyers because they offer low down payments and more forgiving credit scores. and debt income requirements compared to traditional mortgages.

HUD’s condo finder allows you to quickly view a list of FHA approved condos for your area. Searching the database is fairly straightforward, but here are some tips:

First, enter a zip code to restrict the listing to condos in the desired area. If you just hit submit without filling in any fields, you will get results for the whole country.

Filter by status to broaden your search. When you enter the name of a city, county, or even a condo (i.e. the name of the development), you will also be prompted to select a state.

To view, only FHA approved condominium complexes, set the Status drop-down list to Approved. This way you know you are looking at developments where units are eligible for an FHA condominium loan. “Expired” means your license has expired (complexes must be reapplied every three years). “Withdrawn” may indicate a duplicate registration or that the FHA has withdrawn its approval (this is not a good sign).

After selecting the appropriate fields, click the small Submit button to display a list of FHA condos. Are you not crazy about the results? Press the Back button on your browser to perform a new search.

Why are some condos not approved by the FHA?

Many condos are not FHA approved, as FHA loans were only available for condos located in FHA approved developments until October 2019. This meant that out of over 150,000 condominium complexes in the United States, only 6.5% – about 9,750 in total – were eligible for FHA funding.

This does not mean that 93.5% of condo projects in the United States are obsolete. There are likely many resorts in your area whose developers simply did not seek FHA approval and therefore are not listed in the search tool.

The good news: Borrowers can now get FHA approval for individual units in non-FHA-approved condominium complexes. The FHA says that individual permits could increase the number of FHA-approved condos from 20,000 to 60,000 units per year.

A condominium that is not part of an FHA approved complex may still be eligible for an FHA loan.

Here’s another way to use HUD’s condo finder to find more potential options:

Select the same state, city, or zip code that you entered previously. However, choose Rejected from the Status drop-down menu and choose Rejected. Rejected complexes can still be approved for individual units.

Click “Submit” and you will see another list of condo developments.

In some cases, you can find information that development is probably not where you want to live. For example, advice on issues with homeowners associations. But you are likely to come across developments where the lack of approval is due to a lack of documentation. HUD tries to make the FHA condominium approval process easier for developers, although on some smaller complexes the cost of an application can still be an issue.

 

4 Ways To Get The Best USDA Mortgage Rates

The key to getting the best USDA mortgage interest rate is knowing if you and your home are eligible and comparing the interest rates and fees of lenders.

Buy a country house? Loans from the US Department of Agriculture offer a combination of interest rates and fees that can outperform traditional loans and even loans insured by the Federal Housing Administration (FHA).

USDA loans are intended for regular borrowers and new borrowers in low and middle-income rural areas. They allow borrowers to buy homes without a down payment. Bonus: the government definition of “rural” includes suburbs in some places.

How a USDA Loan Can Save You Money

The USDA mortgage program is one of the few that can offer you 100% financing on a home.

Lower USDA warranty fees mean lower rates.

You pay a guarantee fee on a USDA loan whether or not you make a down payment. There are upfront fees that are paid on completion and other fees that are paid monthly for the life of the loan. Guarantee fees are paid instead of mortgage insurance.

r than FHA or private mortgage insurance. Lower fees mean lower interest rates.

If you’re buying a country home, here’s how to get the best combination of USDA mortgage rates and fees.

1. Find out if you and your home are eligible for a USDA loan.

USDA loans are intended for owner-occupied single-family homes in rural areas. The department has a rural property finder that allows you to enter an address to see if the home is eligible for a USDA loan.

Manufactured homes, also known as mobile homes, are eligible if they are new, the owner owns the property, the house is permanent, and taxed as real property rather than personal property. Eligibility for manufactured homes that are not new is limited.

The USDA sets limits on the household income of borrowers. Income limits vary by district and metropolitan area. There are two ways to find income limits:

A questionnaire asking for a location, household size, and income.

A PDF file with a clickable map on the first page that links directly to your report

2. Make sure your credit reports are correct

Before applying for a mortgage, check the accuracy of your credit reports. Lenders check your credit records when deciding whether or not to grant a mortgage. You can request a free credit report every year from the three major credit reporting agencies. If you find any inaccuracies, here’s how to dispute credit report errors.

There is no minimum credit score for USDA loans, but the underwriting process is automated if you have a credit score of 640 or higher.

The accuracy of your credit reports is also important because your creditworthiness is based on this information. While there is no minimum credit score for USDA loans, the underwriting process is automated when you have a credit score of 640 or higher. In addition, the lowest USDA loan rates are given to borrowers with high credit scores.

3. Compare the interest rates on the three types of USDA loans.

USDA rural development loans are of three types: Secured loans. With a USDA secured loan, you get a mortgage from a private lender. The USDA guarantees the loan and protects the lender from the loss of a package if you fail to meet your obligations.

Direct loans. With a USDA Direct Loan, the federal government subsidizes your monthly payment as long as your income remains at or below the region’s low-income cutoff. These loans are low and very low for borrowers

 

What is a USDA loan? Am I eligible for one?

USDA loans are no down payment mortgages for rural and suburban homebuyers. They are primarily aimed at borrowers who are not wealthy and cannot get a traditional mortgage.

Maybe you feel more at home surrounded by grass than cobblestone. In that case, buying a home might be within your reach thanks to the US Department of Agriculture’s mortgage program. In fact, the USDA may have one of the government’s lesser-known mortgage assistance programs.

A USDA home loan is a no-down mortgage for qualifying rural and suburban homebuyers. USDA Loans are provided by the United States Department of Agriculture under the USDA Loan Program, also known as the USDA Secured Home Loan Program for Rural Development.

In 2017, USDA helped around 127,000 families buy and improve their homes as part of its rural development program. The program aims to “improve the economy and the quality of life in rural America”. It offers low-interest rates and no down payment, and you will be surprised at how affordable it is.

With all types of home loans, how do you know if a USDA loan is right for you? Here is an overview of how it works and who is eligible:

How USDA Loan Programs Work

There are three USDA home loan programs:

Loan guarantees: USDA guarantees a mortgage issued by a participating local lender, similar to an FHA loan and a VA guaranteed loan so that you can get low mortgage rates without a down payment. However, if you deposit little or no money, you will need to pay a mortgage insurance premium.

Direct Loans – These mortgages issued by the USDA are intended for very low and very-low-income applicants. Income thresholds vary by region. With grants, interest rates can be as low as 1%.

Home Improvement Loans and Grants – These grants or direct financial loans allow homeowners to repair or improve their homes. Packages can also combine a loan and a grant and provide assistance of up to $27,500.

Qualify for USDA Backed Home Equity

Income limits for securing a home loan guarantee vary by location and depend on the size of the home. This USDA map and chart show the loan guarantee income limit for the county in which you live.

USDA guaranteed home loans can only finance condominiums. The other conditions of participation are:

U.S. citizenship (or permanent residence)

Monthly payment includes principal, interest, insurance, and taxes, equal to 29% or less of your monthly income. Other monthly payments you make cannot exceed 41% of your income. However, the USDA considers higher debt ratios if you have a credit score above 680.

Reliable income, typically for at least 24 months

An acceptable credit history where, among other things, no account has been converted to the collection in the past 12 months. If you can show that temporary or uncontrollable circumstances, including a medical emergency, affected your credit, you may still be eligible.

Applicants with a credit score of 640 or higher will benefit from streamlined processing. Below you have to adhere to more stringent drawing standards. You can also qualify with a non-traditional credit history. “
Applicants with a credit score of 640 or higher will benefit from streamlined processing. Those with lower scores must meet stricter drawing standards. And those without a credit score or bad credit scores can qualify with “non-traditional” credit references such as B. a history of rent and utility payment.

How USDA Home Loans Work

The USDA goes even further to help potential homebuyers by granting mortgages to applicants deemed most needed. It means a person or a family:

  • There is no such thing as “decent, safe and healthy housing”
  • You cannot get a home loan from traditional sources.
  • You have an adjusted income equal to or less than the lower-income limit for the region in which you live
  • USDA typically provides direct loans for homes up to 2,000 square feet and valued at 7,000 m

 

Prequalified vs. Pre-approved: what’s the difference?

Prequalification calculates the amount you can borrow based on a largely informal assessment of your finances. Pre-approval is heavier and requires documentation. Prequalification and pre-approval seem similar, but in general, only pre-approval allows you to stay ahead of the competition in buying a home.

What is mortgage prequalification?

Typically, the prequalification phase involves describing your loans, debts, income, and assets, although application processes vary depending on the lender. Based on this overall financial picture, the lender estimates how much you can borrow. Some lenders also perform a credit check. You can pre-qualify by phone, online or in person.

By pre-qualifying, you can get a feel for your financial preparedness and learn about the different mortgage options. Often, this is a good decision for first-time buyers who are just testing the water and are not ready to participate.

What is mortgage pre-approval?

Pre-approval of a mortgage takes the process to the next level. For pre-approval, you will need to demonstrate your track record and financial stability. The lender examines your income, employment, assets, and debts, as well as your credit report.

You will receive information in the form of a W-2, an up-to-date payslip, a summary of your assets, and total monthly costs and if you already own real estate, a copy of your statement. mortgage and your home insurance.

If you qualify, you will receive a pre-approval letter detailing the amount and type of mortgage the lender is willing to offer as well as the terms and conditions. You can show the letter to sellers and their brokers during home auctions.

A pre-approval offer is not a guarantee, but it does show that you are a serious buyer, which can give you an edge in a highly competitive market.

Pass prequalification and get pre-approved?

You don’t need to be prequalified beforehand. If you know that you are financially ready to buy and want to shop at home, you can skip prequalification and request pre-approval.

 

What is mortgage prequalification?

With prequalification, lenders determine if you meet the basic financial criteria for a home loan. To qualify first, give a lender basic information about your credit, debt, income, and wealth, and tell them how much you can borrow. “Say” is the keyword here. The information used for prequalification is reported. This means that the lender usually does not review them or review your credit report.

Using the prequalification calculator

Our prequalification calculator can give you an idea of ​​what to expect before talking to a lender. We just need information about you and your finances:

  • Enter your annual income before tax.
  • Enter the length of the mortgage you are considering.
  • Enter the interest rate for your mortgage type or use the current mortgage rate.
  • Choose your credit score range. (Not sure? Get your free credit score.)
  • Tell us about your professional situation.
  • Let us know when you have a down payment.
  • Tell us about any previous foreclosure or bankruptcy.
  • Enter your recurring monthly debt payments.

After you have completed all the required fields, you will see the loan amount we recommend as well as a higher loan amount. We show two prequalification amounts because:

Different loans have different debt income requirements. For example, conventional loans often have more stringent DTI requirements than FHA loans that are insured by the Federal Housing Administration.

It doesn’t always make sense to borrow 100% of a lender’s offer. The maximum loan amount is the higher the lender is willing to lend you, and not what makes sense for your budget. A higher loan amount means a higher monthly mortgage payment. Borrowing too much can make it difficult to deal with unforeseen financial problems like losing a job or having a large medical bill.

What is behind the calculation of the prequalification?

Debt to Income Ratio (DTI) is a formula commonly used by lenders to prequalify mortgages. There are two variations: front-end and back-end.

The starting DTI is the dollar amount of your house-related expenses, including future monthly mortgage payments, property taxes, insurance, and homeowners association fees, divided by your gross monthly income.

Your back-end DTI ratio is the sum of your household expenses plus all other monthly debt, including credit cards, student loans, personal loans, and auto loans, divided by your gross monthly income. Traditional mortgage lenders generally prefer a final DTI rate of 36% or less, but government-funded loan programs may allow a higher percentage.

What is the difference between prequalification and pre-approval?

Unlike pre-qualification, pre-authorization requires proof of your debts, income, assets, credit history, and credit history.

To get pre-approved, you will need to provide documents such as payslips, tax documents, and proof of assets. After the lender has reviewed your financial information, which may take a few days, you will need to produce a pre-approval letter that you can show a real estate agent or seller to show that you are ready and able to buy. a house.

Please note that prequalification does not guarantee prior approval. You can still be rejected if your financial records do not support the numbers you reported.

Does prequalification affect your creditworthiness?

Prequalification does not affect your creditworthiness. Lenders generally base their prequalification on the information you provide and will not receive your credit report.

When a lender checks your credit report, it is considered a “difficult investigation”. Too many difficult inquiries can lower your credit score if it turns out that you are trying to open many new lines of credit in a short period of time. Multiple applications in a short time due to mortgage rate research.

 

Documents required for a mortgage pre-approval letter: a checklist

You don’t need to get a mortgage pre-approved before heading home, but it’s a good idea, especially in a seller’s market where competition between buyers is intense. Unlike a prequalification, a pre-approval letter lends weight to your ad and shows sellers that you have the financial strength to secure their listing.

To get pre-approved, you’ll need to look at your income, employment, assets, and debts, says Bob McLaughlin, former senior vice president, and director of residential mortgages at Bryn Mawr Trust in Bryn Mawr, Pa.

You probably already have a lot of recordings that you need or can easily access. “Document collection should not take more than a week depending on the lender’s requirements and whether you need documents from outside sources such as an attorney or the county government,” said Andy Kush, sales manager. of Patelco home loans. A credit union in Pleasanton, California.

Your lender may want more documents if you are self-employed or if your income comes from multiple sources. Also, be prepared to share information such as your Social Security number that you can use to review your credit reports and results. The name and address of your employer; and your rental date.

Income and employment

The documents required to verify income depend on how you are paid. This step is easiest for workers with a one-stop-shop paycheck who provides an annual W-2 form and who have little or no overtime or shift differences.

Tax Returns: Copies of both your most recent federal and state returns may be required.

Income:

W-2 Beneficiaries: Copies of the W-2 forms and your last two payslips. If your earnings include overtime, bonuses, or differential pay, you might need your last year-end payslip.

Self-Employed, Self-Employed, and Independent Contractors – Self-employed borrowers, including sole proprietorships, partnerships, and suburban businesses, need a year-to-date cumulative income statement and two-year records, including the Form 1099 that you used to report the income. and explain the taxes.

Real estate income. Document the rental income, address, lease, and current market value of a rental property when you use that income to qualify for a mortgage.

Were

Bank Statements – Copy 60-day bank statements for each account whose assets you use to qualify for the mortgage. Also, add blank pages with instructions.

Pension and brokerage accounts: two months of IRA statements, investment accounts (stocks and bonds), and certificates of deposit. The latest 401 (k) quarterly statement shows the purchased balance. As with bank statements, including all pages, including blank pages.

Debt

Monthly Debt Payments – Lenders look at your payment obligations to calculate your debt-to-income ratio. List all monthly debt payments, including student loans, car loans, mortgages, and credit cards. Include the name and address of each creditor, their account number, the loan balance, and the minimum payment amount. If you don’t have a credit history, utility bills or records of other recurring payments can be used to qualify for a mortgage.

Home Debt: If your current property is mortgaged, secure your last bank statement with the loan number, monthly payment, loan balance, as well as the name and address of the lender and the policy statement page.

Other records

Rent: Tenants are required to provide proof of payment for the past 12 months and landlord contact information for the past two years.

Divorce: Prepare your divorce decision and any court order regarding child support and child support, if applicable.

 

FHA Rating Requirements for Homes and Condos

The FHA housing requirements state that FHA approved condominiums and apartments must be safe, sound, and secure in order to qualify for an FHA loan. The assessors decide whether the minimum FHA ownership requirements are met.

In order to take advantage of an FHA loan, the borrower and the property must meet certain criteria.

You must meet the financial requirements of your lender and the property must meet the FHA housing requirements set by the Department of Housing and Urban Development (HUD).

All homes are subject to HUD’s “minimum ownership standards”, and new construction must also meet the agency’s “minimum ownership standards”.

The FHA property rules ensure that the home is structurally sound, livable, and worth at least as much as you wish to borrow.

Basic requirements for the FHA enclosure

HUD’s minimum real estate requirements are as follows: Homes purchased with FHA loans must be safe.

In this case, “safe” means something other than “safe from thieves”. Rather, the home should be a safe investment, which means that it will hold value for the life of the loan.

FHA Assessment Checklist

For a complete list of FHA assessment guidelines, see the HUD Single Family Policy Manual. But, fair warning, this is a fairly dense read. Here are some important points:

The foundation must be structurally sound.

The water must come from the base.

Utilities, including water, sewerage, heating, and electricity, should be activated during the assessment.

  • All devices must function properly.
  • The water pressure must be sufficient and hot and cold water must be available.
  • The paint cannot be chipped, peeled off, peeled off, or broken.
  • Sockets and switches must work properly.
  • Windows must be opened, closed, and locked.

The roof cannot leak and must have a useful life of at least two years.

Attics and crawl spaces must be ventilated and free from damage.

There is no active termite infestation.

The property must be reasonably free from environmental hazards, odors, and excessive noise.

 

FHA Rating Requirements for Homes and Condos The FHA housing requirements state that FHA approved condominiums and apartments must be safe, sound, and secure in order to qualify for an FHA loan. The assessors decide whether the minimum FHA ownership requirements are met. In order to take advantage of an FHA loan, the borrower and the property must meet certain criteria. You must meet the financial requirements of your lender and the property must meet the FHA housing requirements set by the Department of Housing and Urban Development (HUD). All homes are subject to HUD’s “minimum ownership standards”, and new construction must also meet the agency’s “minimum ownership standards”. The FHA property rules ensure that the home is structurally sound, livable, and worth at least as much as you wish to borrow. Basic requirements for the FHA enclosure HUD’s minimum real estate requirements are as follows: Homes purchased with FHA loans must be safe. In this case, “safe” means something other than “safe from thieves”. Rather, the home should be a safe investment, which means that it will hold value for the life of the loan. FHA Assessment Checklist For a complete list of FHA assessment guidelines, see the HUD Single Family Policy Manual. But, fair warning, this is a fairly dense read. Here are some important points: The foundation must be structurally sound. The water must come from the base. Utilities, including water, sewerage, heating, and electricity, should be activated during the assessment. All devices must function properly. The water pressure must be sufficient and hot and cold water must be available. The paint cannot be chipped, peeled off, peeled off, or broken. Sockets and switches must work properly. Windows must be opened, closed, and locked. The roof cannot leak and must have a useful life of at least two years. Attics and crawl spaces must be ventilated and free from damage. There is no active termite infestation. The property must be reasonably free from environmental hazards, odors, and excessive noise.

The FHA housing requirements state that FHA approved condominiums and apartments must be safe, sound, and secure in order to qualify for an FHA loan. The assessors decide whether the minimum FHA ownership requirements are met.

In order to take advantage of an FHA loan, the borrower and the property must meet certain criteria.

You must meet the financial requirements of your lender and the property must meet the FHA housing requirements set by the Department of Housing and Urban Development (HUD).

All homes are subject to HUD’s “minimum ownership standards”, and new construction must also meet the agency’s “minimum ownership standards”.

The FHA property rules ensure that the home is structurally sound, livable, and worth at least as much as you wish to borrow.

Basic requirements for the FHA enclosure

HUD’s minimum real estate requirements are as follows: Homes purchased with FHA loans must be safe.

In this case, “safe” means something other than “safe from thieves”. Rather, the home should be a safe investment, which means that it will hold value for the life of the loan.

FHA Assessment Checklist

For a complete list of FHA assessment guidelines, see the HUD Single Family Policy Manual. But, fair warning, this is a fairly dense read. Here are some important points:

The foundation must be structurally sound.

The water must come from the base.

Utilities, including water, sewerage, heating, and electricity, should be activated during the assessment.

  • All devices must function properly.
  • The water pressure must be sufficient and hot and cold water must be available.
  • The paint cannot be chipped, peeled off, peeled off, or broken.
  • Sockets and switches must work properly.
  • Windows must be opened, closed, and locked.

The roof cannot leak and must have a useful life of at least two years.

Attics and crawl spaces must be ventilated and free from damage.

There is no active termite infestation.

The property must be reasonably free from environmental hazards, odors, and excessive noise.

 

Requirements for a mortgage and HELOC

If your home is worth more than your mortgage balance, you have equity. If you’re lucky or smart to find yourself in this situation, here’s how you can convert that equity into purchasing power.

Ways to unlock your home

The two most common ways to gain access to the equity in your home are through a home equity loan or home equity line of credit. The loans offer a lump sum at a fixed rate of interest which is repaid over a period of time. A HELOC is a revolving line of credit that you can draw, repay, and withdraw for a specified period, typically a decade. It often starts with an adjustable-rate, followed by a fixed rate.

A third option is paid refinancing, where you refinance your existing mortgage into a loan for more than what you owe and keep the difference in cash.

Home equity loan terms vary depending on the lender. However, these standards are typical:

  • The equity in your home of at least 15% to 20% of its value, which is determined by an appraisal
  • Debt-to-income ratio of 43% or possibly up to 50%
  • Credit score of 620 or higher
  • Strong history of paying bills on time
  • Your debt to income ratio

To assess your mortgage loan application, lenders calculate your debt-to-equity ratio to determine if you can afford to borrow more than your existing obligations.

To find this number, add up all of your monthly debt and other financial obligations, including mortgages, loans and leases, and child support, divide it by your monthly income, and then convert this number to a percentage. For example, if you earn $3,000 per month and make payments totaling $ 1,200, your DTI is 40%.

What Debt-to-Income Ratio Do Lenders Need? For a fixed-rate term home loan, federal regulations set the limit at 43% DTI.

With HELOC, lenders have more discretion, which means you can look around if your DTI is higher. Comerica offers home equity lines of credit with DTIs of up to 50%, says Winston McEwen, deputy director of Comerica Bank’s banking center in Cupertino, Calif. According to its website, Chase has set a debt income limit of 43% for HELOC.

This set of standards requires consumers to exercise their best judgment. Even if you qualify, carefully consider the amount of debt you owe. When you take out a home loan, you risk your home as collateral, which means the bank could keep the home if you fail to repay your loan on time.

Role of credit scores

Lending strategies vary. “What one lender considers a ‘good score’ may not be viewed as a great score by another,” said Ethan Dornhelm, FICO vice president of valuation and analysis. In Comerica, for example, the minimum FICO for home equity loans is 680, McEwen says.

Refinancing of ashes

A less popular option for accessing home equity is to refinance yourself with a new mortgage and then extract some of the equity in cash. Your refinance rate depends on the current mortgage rate. Zimmerman said the borrowers he works with avoid this type of refinancing because they will end up paying a higher interest rate than they are currently paying.