FHA loans

FHA loans are mortgages issued by the Federal Housing Administration. Designed for borrowers with low-to-moderate income, FHA loans have lower down payment requirements and accept lower credit scores than many conventional loans. Because of this, FHA loans can be an attractive option for many first-time home buyers.


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Reasons to choose fha


  • Generally lower down payment requirements that can accept gift funds
  • Lower FICO score requirements than conventional financing
  • Allows for higher debt-to-income ratios to qualify
  • Increased allowance of seller concessions
  • Mortgages are assumable and in a rising interest rate environment can position an advantage when selling

FHA qualifications


  • 500-579 FICO score requirement with a 10% down payment. 
  • 580+ FICO score requirement for borrowers with at least a 3.5% down payment 
  • 43% maximum debt-to-income ratio (50% in some cases). 
  • An appraisal must be done by an FHA-approved appraiser
  • 2 year waiting period after a bankruptcy (3 year waiting period for foreclosure)
  • Mortgage insurance (MIP) is required
  • Two years of employment history
  • Non-occupying co-borrowers allowed
  • Must occupy the home as a primary residence
  • Steady employment and be able to prove income with recent tax returns, W2’s, and paycheck stubs


FHA Loans Pros & Cons



  • Low Down Payment

    Depending on your FICO score, you might only need a 3.5% down payment

  • Relaxed Credit Requirements

    FHA loans are available for borrowers with credit scores as low as 500

  • Small Reserve Funds

    You don’t need to have reserves when purchasing either a single family home or condominium. However, if you’re purchasing a duplex or multi-family home, three months will typically be required

  • Upfront Mortgage Insurance Premium

    1.75 percent of the loan amount is paid when the borrower gets the loan. The premium can be rolled into the financed loan amount

  • Annual Mortgage Insurance Premium

    This ranges between 0.45 percent to 1.05 percent, depending on the loan term (15 years vs. 30 years), the loan amount and the initial loan-to-value ratio (LTV). This amount is divided by 12 and paid monthly

  • Loan Limits

    FHA loans have a loan limit ceiling between $314,827 – $726,525, depending on area

  • Minimum Property Standards

    Property must meet minimum standards to be eligible. A few of these standards include: home must be complete and “marketable”, must be free from hazards (lead-based paint, etc), and must be safe to access from public road.

FHA loans are mortgages issued by the Federal Housing Administration. Designed for borrowers with low-to-moderate income, FHA loans have lower down payment requirements and accept lower credit scores than many conventional loans. Because of this, FHA loans can be an attractive option for many first-time home buyers.
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