This loan option may be good if this is the first time you have bought a house and don’t have enough money saved for a down payment or if you have filed for a past bankruptcy, had foreclosure or have encountered other financial difficulties.

You may qualify if you have a: 

• FICO® score of at least 580, which would allow you make a 3.5% down payment (typical down payment is 20%).
• FICO® score between 500 and 579, which would allow you to make a 10% down payment (typical down payment is 20%).
• Debt-to-income ratio that is less than 43%.

Also, the home you are buying must be your primary residence, and you must have a steady income and proof of employment.

The DTI compares your monthly debt to your gross income and is a key indicator of how well you are managing your finances.

To calculate your DTI, simply divide your total monthly debt payments by your gross monthly income. For example:

• Total monthly payments are $1,550 and your annual salary is $60,000 (before taxes and other deductions).
• Divide $60,000 by 12 to get the monthly gross income, which would be $5,000. 
• Then take your monthly payments of $1,550 and divide by the monthly gross income of $5,000. The number would be .31 or 31%. 

The lower the DTI the better, but for FHA loans, the debt to income ratio is up to 55% with compensating factors. The maximum is 55%.