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Rocket Mortgage and FHA Loans: Your Complete Guide

For many first-time homebuyers and borrowers with less-than-perfect credit, an FHA loan can be a great option to help get into a new home. FHA loans are backed by the Federal Housing Administration and feature flexible credit score and down payment requirements. 

With an FHA loan, you typically only need a credit score of 580 and a down payment of just 3.5%. This makes them more accessible than conventional mortgages for borrowers who can’t meet the stricter criteria.

Rocket Mortgage is one of the largest mortgage lenders in America. But do they offer FHA loans?

Yes, Rocket Mortgage does offer Federal Housing Administration (FHA) loans. They provide financing for FHA Purchase Loans, FHA Streamline Refinance, and FHA Cash-Out Refinance. However, they do not offer the FHA 203(k) rehab loan. The company offers competitive interest rates and a streamlined application process for these loans.

Man singing a contract

Does Rocket Mortgage Offer FHA Loans?

Yes, Rocket Mortgage does offer FHA loans. They provide financing for several types of FHA loans, including:

  • FHA Purchase Loans – For buying a primary residence
  • FHA Streamline Refinance – To refinance an existing FHA loan 
  • FHA Cash-Out Refinance – To tap home equity by refinancing

One type of FHA loan that Rocket Mortgage does not offer is the FHA 203(k) rehab loan. But for standard FHA financing they are a viable lender option.

Benefits of Getting an FHA Loan from Rocket Mortgage

There are several advantages to getting an FHA mortgage through Rocket Mortgage:

1. Lower Down Payment

The minimum down payment for an FHA loan is just 3.5% of the purchase price or appraised value. This makes homeownership more affordable, especially for first-time buyers without substantial cash reserves.

2. Flexible Credit Score Requirements

With Rocket Mortgage, you can qualify for an FHA loan with a credit score as low as 580. Many conventional loans require scores of 620 or higher.

3. Competitive Interest Rates

Rocket Mortgage offers very competitive interest rates on their FHA products. This helps keep your monthly mortgage payments low.

4. Streamlined Application Process

Rocket Mortgage has invested heavily in technology to provide a faster, simpler loan application and approval process. You can even apply completely online.

How to Apply for an FHA Loan with Rocket Mortgage

If an FHA mortgage seems right for you, here are the steps to apply with Rocket Mortgage:

  • Get pre-approved – This shows sellers you’re qualified and speeds up the final loan approval.
  • Gather your documents – W-2s, paystubs, bank statements, etc. to verify incomeassets and credit history
  • Complete the application – Apply online or with a mortgage broker. Rocket Mortgage offers both options.
  • Get your home appraised – An FHA-approved appraiser will evaluate the property you want to buy. 
  • Close on your home! – After underwriting approves your loan, you can schedule a closing date.

Rocket Mortgage has mortgage specialists available to guide you through every part of the process.

What are the Eligibility Criteria for an FHA Loan with Rocket Mortgage?

To qualify for an FHA loan with Rocket Mortgage, here are some key eligibility requirements:

  • Credit score of at least 580 
  • Total debt-to-income ratio below 45%
  • Sufficient income and assets to show ability to repay
  • Property appraises for the purchase amount 
  • Property will be your primary residence

Meeting these criteria improves your chances of loan approval. Rocket Mortgage also requires homebuyer education for first-time buyers.

What Documents Do You Need to Apply for an FHA Loan with Rocket Mortgage?

When applying for an FHA mortgage, here are some key documents Rocket Mortgage will require:

  • W-2s and recent paystubs to verify employment income
  • Federal tax returns for self-employment or rental income
  • Bank statements to show cash assets for down payment
  • Documentation of any investments or retirement accounts
  • Credit report and scores from all three bureaus 
  • List of monthly debt obligations and liabilities
  • Property appraisal and home inspection reports

Having these documents ready will make the application process faster. Your loan officer can provide a full checklist.

What are the Drawbacks of Getting an FHA Loan from Rocket Mortgage?

While they offer advantages, FHA loans do come with a few drawbacks to consider:

  • Require mortgage insurance – Adds to monthly payment
  • Limitations on the type of property – Condos or co-ops may not qualify
  • Lower loan limits than conventional mortgages
  • Stricter occupancy rules – Must be primary residence
  • Potentially a slower closing time than conventional loans

While not dealbreakers for most, these are factors to weigh with your specific situation.

Alternatives to Rocket Mortgage for FHA Loans

Rocket Mortgage isn’t your only option for FHA financing. Some other top lenders include:

  • Fairway Independent Mortgage
  • Freedom Mortgage 
  • loanDepot
  • Guild Mortgage
  • AmeriSave Mortgage

Shopping around helps you compare rates and fees to find the best FHA loan for your needs. Your local mortgage broker can also match you with lenders.

Conclusion: Is a Rocket Mortgage FHA Loan Right for You?

For borrowers who want flexible qualifying with low down payments, an FHA loan from Rocket Mortgage can be an excellent choice. Their online process and rate competitiveness make them a strong option for government-backed financing.

Carefully weigh the pros and cons for your situation. Make sure you meet all eligibility requirements. And compare multiple lenders to find the best FHA mortgage lender for your specific needs. With the right preparatory steps, you can determine if a Rocket Mortgage FHA loan is the optimal way for you to finance your home purchase or refinance.

Frequently Asked Questions(FAQ)

What will disqualify you from an FHA loan?

FHA loan eligibility can be affected by several factors. The most common disqualifying factors include a low credit score, insufficient income, a high debt-to-income ratio, and a history of delinquency on other loans. Additionally, applicants must have a valid Social Security number and must provide proof of legal residency in the United States. Finally, FHA loans require a down payment of at least 3.5%.

What is the disadvantage of Rocket Mortgage?

Rocket Mortgage has been criticized for its lack of transparency in terms of fees and costs associated with the loan. Additionally, it has been noted that the company does not offer the lowest interest rates available, and that its customer service can be lacking at times. Furthermore, the online application process can be difficult to navigate, resulting in delays in loan processing.

What is the lowest credit score Rocket Mortgage will accept?

Rocket Mortgage, a mortgage lender, will accept a minimum credit score of 580 for FHA loans. This score is lower than the minimum credit score of 620 typically required for conventional mortgages. Other factors like income, employment history, and down payment amount will also be taken into consideration.

Is Rocket Mortgage easy to get approved?

Rocket Mortgage is a digital mortgage experience offered by Quicken Loans that makes it easy for borrowers to get approved for a mortgage. It offers an automated loan process, quick approval times, and a variety of loan options. The application process is simple and straightforward, and applicants can receive an approval decision in minutes. Rocket Mortgage is a reliable and convenient way to get approved for a mortgage, providing a streamlined and efficient experience.