Considering setting up roots in Oklahoma? The Sooner State is surprisingly diverse, boasting the largest Native American population in the contiguous United States; in fact, 16% of all Oklahomans identify as having Native American ancestry. 39 different tribes, including the Cheyenne and Arapaho, Chickasaw, Comanche, Shawnee, and Cherokee, all have vibrant communities throughout the area’s endless plains. Additionally, Oklahoma has a rich African American history, including a number of All-Black towns.
Choctaw County and Norman are two parts of Oklahoma that have experienced rapid population growth while emphasizing inclusivity; Norman had a perfect 100 score on the Municipal Equality Index last year, making it a warm and welcoming community for LGBTQ+ individuals. It’s no wonder that even though only 3.8% of Oklahoma’s population is LGBTQ+, 38% of queer individuals here are parents; it’s a great place to raise a family.
Tulsa and Oklahoma City boast trending neighborhoods with lively nightlife, top-rated restaurants, and a more inclusive way of life. Oklahoma City is also the hometown of the country’s first nonbinary state legislator, Mauree Turner.
Marginalized people throughout the United States, including in Oklahoma, face additional challenges when it comes to achieving homeownership, but you have many excellent choices. An FHA loan may be the best option if you’re worried about lower credit scores or don’t have substantial savings. FHA loans, insured by the Federal Housing Administration (FHA), offer a way to homeownership for many Oklahoma residents.
Contact Pride Lending today to learn if an FHA loan is right for you.
What Are FHA Loans?
If buying your home in Oklahoma has been on your mind, but you’re worried you don’t have a good enough credit score or can’t save up enough for the initial costs of buying a house, an FHA loan may be right for you. FHA loans are available through the Federal Housing Administration (FHA) and the United States Department of Housing and Urban Development (HUD), often with fewer requirements.
Since being created in the 1930s, FHA loans have helped more than 40 million Americans buy a home, particularly those who may have been turned away from other financing options. Over 30% of these mortgages are provided to people of color, which is much higher than for other mortgage products.
The Department of Housing and Urban Development has also been instrumental in pushing for equality in mortgage lending, including its groundbreaking rules in 2012 that required FHA lenders not to discriminate based on actual or perceived gender identity or sexual orientation. This means that those turned away from other financing due to discrimination often enjoy a better chance of success with federally-backed products.
FHA loans tend to be more lenient than conventional financing, offering financing to Oklahoma residents with less-than-perfect credit, first-time homebuyers, or those who cannot save up for the 5% down payment and closing costs necessary for a conventional mortgage. With no minimum or maximum income requirements, FHA loans are a great choice for those hoping to buy a home in Oklahoma.
While Oklahoma FHA loans are ideal for first-time homebuyers, they’re also available to various buyer types. The FHA program doesn’t limit program eligibility to first-time home buyers; other potential homeowners can qualify as well.
Benefits of Federal Housing Administration Loans in Oklahoma
Since Oklahoma FHA loans are backed by the Federal Housing Administration, they include various benefits that make homeownership an easier task. Here are a few advantages you can expect with an FHA loan.
Lower Credit Score Requirements
Recent bankruptcies, foreclosures, or late payments can damage your credit score and make it difficult to obtain a home loan. Unfortunately, these are common issues for LGBTQ+ and BIPOC individuals, which makes it even harder to achieve property ownership.
For example, one-third of LBQ women have experienced some form of financial crisis in the last year. Individuals from Black majority neighborhoods are more likely to file for bankruptcy than those from White majority neighborhoods, but they’re also less likely to experience long lasting debt relief.
If you’ve experienced a bankruptcy, foreclosure, or other issue within the last two years, contact Pride Lending. We’re happy to help explore your options and see if you may still be able to qualify for mortgage products, including an FHA loan.
FHA loans have less stringent credit score requirements than conventional loans. You will need at least a 500 credit score to qualify for an FHA loan. However, higher scores of 580 or more will qualify for a lower down payment option.
Small Down Payment Options
Saving up for the upfront costs often required to buy a home with conventional loans can be difficult for many prospective buyers, especially marginalized individuals.
Income poverty for Native American and African-American individuals is more than twice the rate of poverty for White individuals, and Black households are more likely to experience income volatility. About 20% of LGBTQ+ individuals have no savings at all, which can make it incredibly hard to afford homeownership.
Thankfully, FHA loans reduce these barriers by requiring less upfront.
With an FHA loan in Oklahoma, you can finance a home loan with as little as a 3.5% down payment. Additionally, first-time homebuyer down payment assistance programs may help reduce the typical out-of-pocket expenses.
Our team will search for local, statewide, and nationwide assistance programs. We can also find options that are specially geared toward marginalized borrowers, such as Native American borrowers buying on tribal land.
Competitive Interest Rates
Interest rates can be a challenging subject for minority borrowers, who are often charged higher rates due to discriminatory practices. As an example, Native American borrowers living on reservations may be charged as much as 204 basis points higher than their White peers. Last year, Black and Hispanic applicants were charged approximately 4.9% compared to just 4.8% for White applicants.
Same-sex couples also face higher rates due to discrimination in the housing industry, which assumes that LGBTQ+ couples are higher risk than their peers.
However, since the Federal Housing Administration secures FHA loans, many lenders are willing to offer more competitive interest rates to borrowers. Home loan interest rates are set by the Federal Reserve and may vary depending on loan amount, upfront investment, or credit scores. However, FHA loans typically offer lower interest rates than other mortgage options.
Flexible Underwriting Guidelines
FHA loans have more flexible underwriting guidelines than other loan types. The loan application process has more room for fluctuation, allowing borrowers who might not otherwise qualify to purchase a home.
For example, while FHA loans were initially designed for first-time homebuyers, the program has evolved significantly and is now open to anyone, even those who have owned property before; there are no income limits or restrictions on prior home ownership. FHA loans also allow borrowers to apply for a mortgage with lower credit in return for a higher down payment.
Assumable Mortgages
FHA loans are assumable mortgages, which means the Federal Housing Administration allows buyers to assume an already-existing mortgage, including the locked-in interest rates. The buyer takes over the initial loan and continues paying the lender using the same loan terms previously established.
FHA Loan Requirements
The Federal Housing Administration does have a few loan requirements that borrowers must meet to qualify for financing. Do you qualify for an FHA loan?
This eligibility checklist will tell:
- A credit score of at least 500 (580 for some lenders)
- A down payment of between 3.5% and 10%
- A DTI ratio of up to 57% (usually better to aim for 43%)
Minimum Credit Score
Obtaining an FHA loan requires at least a 500 credit score. However, some lenders will require at least a 580. A higher credit score of 580 is needed to qualify for a low 3.5% down payment, and lower credit scores, between 500 and 579, will require 10% toward the purchase price.
If you want to access good rates by improving your score, contact us for advice on how to give yourself the best chance of success. We can advise you on options to improve your finances without unnecessary spending.
Down Payment Amount
FHA loans allow a down payment as low as 3.5%. However, eligibility for this interest rate depends on credit score. Lower credit may require 10% upfront.
Oklahoma does have assistance programs available, which may be open to some individuals. The Homebuyer Down Payment Assistance Program is available through the Oklahoma Housing Finance Agency. The REI Down Payment Assistance Program also helps Oklahoma buyers cover down payment and closing costs. Pride Lending will seek out any assistance that may apply to your circumstances, which includes nationwide DPA programs and those for more specialized situations.
Debt-To-Income Ratio (DTI)
The FHA loan program requires that your DTI ratio not exceed 43%, meaning you cannot spend more than half of your gross income on debt. However, some lenders may have different debt-to-income ratio requirements, with some companies allowing a DTI up to 57%.
Property Standards
Obtaining an FHA loan in Oklahoma requires the purchase of a habitable property. FHA loans aren’t usually available for Oklahoma properties that require extensive repairs. A home appraisal and inspection are important parts of the underwriting process when purchasing a home through the FHA loan program.
Otherwise, FHA loans are available for a wide range of properties, including single-family homes, condos, manufactured homes, and multi-unit properties. However, they are only applicable when purchasing a primary residence.
Mortgage Insurance Premiums (MIP)
FHA loans require two types of mortgage insurance premium (MIP): an upfront payment of 1.75% of the loan amount, called the UFMIP, and then a monthly mortgage insurance payment, called the annual MIP.
Everyone will have to pay both the upfront MIP and some annual MIP, but the percentage and term of the annual MIP will vary based on how much you provide upfront. Those who offer a down payment of 10% of more will have a lower MIP rate and will only need to pay it for 11 years, while those that offer less than 10% down will have a higher MIP rate and will have to pay it for the entire term of their loan.
If you are not able to provide at least 10%, it’s possible to refinance your mortgage into a conventional loan once you build up at least 20% equity. This will remove private mortgage insurance and help you save money over time.
Oklahoma FHA Loan Limits
FHA loan limits are the maximum loan amount a borrower can finance through the program. Each year, the National Housing Act sets maximum loan limits for conforming loans for the following year. The FHA loan limit is set at 65% of the annual loan limit and may vary depending on the state, county, and property type.
Most counties in Oklahoma have a maximum FHA loan limit of $498,257 for a single-family home. FHA loans also allow Oklahoma buyers to purchase multi-unit properties as long as one of the properties is their primary residence. The FHA loan limit on four-limit properties in Oklahoma is $958,350.
The FHA Loan Process
Ready to get started on purchasing your dream home in Oklahoma? Get started with the following steps:
- Check the Latest FHA Loan Requirements – To qualify for an FHA loan in Oklahoma, you must meet certain requirements, such as a minimum credit score.
- Contact Pride Lending – Contact Pride Lending once you’re ready to apply for your FHA mortgage. During your loan consultation, we’ll review your details and let you know what types of loan options are available for you.
- Submit Your Details – To get started, you’ll need ID, proof of income, and employment information. You can provide all of this online through our seamless application process.
- Get Pre-approved and Start Shopping – Pre-approval, while not strictly necessary, helps you stay competitive in hot markets because it shows that you’re serious about purchasing. We’ll provide you with a tentative loan amount and send a pre-approval letter to your realtor so you can begin shopping for your dream home in Oklahoma. If you have any questions throughout the process, don’t hesitate to ask!
- Submit Your Offer – Once you’ve found a place that you love, you and your realtor will craft a competitive offer letter to help you stand out.
- Complete Your Application – The Uniform Residential Loan Application for FHA mortgages has much of the same information that you provided for your pre-approval, but it also has information about the property itself so that the lender can determine whether it represents an acceptable level of risk.
- Offer Acceptance – If the seller accepts your offer, you’ll sign a purchase contract with them, and then you and your realtor will schedule an inspection.
- Inspection – Though this is required by the FHA program, most lenders will insist upon it, and you should too. This ensures there are no serious problems that could put you in danger. If anything is undercovered, you and the seller must negotiate about who will pay for the repairs.
- Conditions – If the inspection comes back clear, then your loan officer at Pride Lending will work on the sales contract with you. We’ll make sure all the conditions are correct and that there are no concerns.
- Undergo Underwriting – After we’ve checked over the conditions, we will send all the information to your lender’s underwriting department; we do not do underwriting in-house. Your mortgage lender will review your financial information and process the loan.
- FHA Appraisal – As part of underwriting, your mortgage company will schedule an appraisal. This checks that the home is safe and secure, and it also ensures that the price matches the home’s real value.
- Clear to Close – The underwriter will issue a conditional close while they check over a few final details; once this is done, they’ll issue a final approval, and you’re clear to close. Our team will schedule the closing date with you, and the title company will send details about how to provide your payments to them.
- Close the Sale – After completing all the paperwork and finalizing the appraisal and inspection, it’s time to meet with the lender and your realtor to sign the paperwork. Congrats! You’re officially an Oklahoma homeowner.
Why Choose Pride Lending for Your Oklahoma FHA Loan?
Pride Lending helps Oklahoma residents learn more about their financing options. Whether seeking a lively condo in Oklahoma City or a family-friendly single-family residence in Tulsa, an FHA loan in Oklahoma is a great way to make your dreams come true.
We pride ourselves on offering an easy, seamless, and inclusive method of financing your next home purchase. With a team of expert-level lenders and a commitment to serving under-served communities, we’re in it to change the home loan process for everyone. Our team is composed of allies and members of minority communities, including BIPOC and LGBTQ+ professionals who are committed to ensuring everyone has the financing they need for their dreams.
Easily apply for an FHA loan using our online system. You can also call our lending team today at 725-231-0192. We can’t wait to meet you and help you achieve your homeownership dreams.
