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Potential borrowers often have questions about the Federal Housing Administration’s mortgage guidelines regarding required income of borrowers.

One of the key guidelines for home loans insured by the FHA relates to the loan amount an applicant is eligible to receive. This, of course, is linked to the borrower’s household income.

The FHA loan officer will look closely at the mortgage’s monthly payment in relation to the borrower’s income and debt obligations. The FHA will want the borrower’s mortgage payments (including principal, interest, property taxes and property insurance) to be no more than 31 percent of the family’s gross monthly income.

The borrower’s debt obligations — mortgage, credit cards, auto loans, student loans and others — cannot exceed 43 percent of the family’s monthly income. These ratios are more generous than those required by most non-FHA mortgages in today’s market. Even better terms and ratios are available to buyers of energy-efficient homes.

Let’s review a few other key guidelines:

• Down payments can be as low as 3.5 percent of the purchase price. A property appraisal is required for all FHA mortgage loans. The applicant must disclose all “sales concessions” to the appraiser. This may include the seller paying for such cost items as discount points or origination fees, interest rate buy-downs, closing cost assistance and builder incentives.

• The closing costs that FHA considers to be reasonable include lender origination fees (up to 1 percent of loan), attorney’s fees, appraisal fees, home inspection fees (up to $200), title insurance, property survey, credit reports and transfer and recording fees.

In most cases, credit scores above 620 will be acceptable. There is no established national limit for the amount of an FHA mortgage. The amount is based on the median cost of homes in the local area.

These are general guidelines for processing an FHA mortgage application. Keep in mind they do change from time to time. For more information, consult with a mortgage loan officer.

— Jim Woodard of Creators News Service

Tips from the Pros features tips on issues of interest to homeowners. Local professionals are encouraged to participate. Contact Heather L. Modlin at 373-7144 or e-mail heather.modlin@news-record.com.