FHA Home Loan Options

ASK ABOUT ZERO DOWN HOME LOANS

FHA Loan Programs

Choose from Several 2021 FHA Mortgage Options

With its low down payment requirements and flexible guidelines, FHA-insured loans have always been a great option for first-time homebuyers. This holds true for repeat homebuyers as well. Whether you are buying your first home or moving to a new one, there is an FHA loan program to suit your needs.

Getting prequalified is a simple and quick process, and can even be done over the phone. Your loan officer will require information about your basic finances, such as debt, income, and assets. After running these numbers and evaluating them, he/she can tell you an amount you may qualify to borrow.

While prequalifying for a loan doesn’t necessarily guarantee that you will be able to purchase the home of your dreams, it does help you and potential lenders know your borrowing power and what you can afford in terms of a monthly mortgage payment.

FHA Jumbo Loans

Borrowing the FHA Loan Maximum Amount

New FHA / HUD Guidelines will insure new increased loan amounts based on your county and state. That means you can take advantage of new maximum loan limits for FHA loans. Qualifying customers can now apply for an FHA Jumbo Loan up to the maximum allowed by FHA. You can apply for a home loan with 3.5% down under new FHA loan limits.

A sampling of FHA approved lenders show the following qualifying guidelines:

Qualified borrowers pay for closing costs plus down payment covering the 3.5% statutory minimum.
Standard FHA guidelines and regulations apply, yet many lenders do require a 580 FICO score.
For greater loan amounts on purchases, minimum FICO scores increase to 600 on Purchase, Rate / Term refinances and to 640 on cash-out refinances.
Maximum Debt to Income Ratio’s are 43% on the back end.
No down payment assistance on loan amounts over $484,350.
No non traditional credit.
Declining Markets: Two appraisals will be required when the loan amount, excluding upfront MIP, will exceed $484,350 and the LTV equal to or greater than 95%.

FHA Loans for Condominium Units

Condo Loans Insured Through Section 234(c)

FHA Condominium Loans are specifically geared toward those who purchase housing units in a condominium building. Condominium ownership, in which separate owners of individual units jointly own the development’s common areas and facilities, is for some a very popular alternative to home ownership. Insurance for this type of housing is provided through FHA Section 234(c). This FHA insurance is very important for low and moderate-income renters who wish to avoid the risk of being displaced when their apartments are converted into condominiums.

How it Works

FHA Condominium Loans are designed to encourage lenders to extend affordable mortgage credit to those who have non-conventional forms of ownership. The Section 234(c) program insures a loan for 30 years to purchase a unit in a condominium building. The building must contain at least four dwelling units and can be comprised of detached and semidetached units, row houses, walkups, or an elevator structure.

Through this and other types of mortgage insurance programs, FHA helps low and moderate-income families purchase homes with FHA loans by keeping the initial costs down. By serving as an umbrella under which lenders have the confidence to extend loans to those who may not meet conventional loan requirements, FHA loan insurance allows individuals to qualify who may have been previously denied for a home loan by conventional underwriting guidelines.

Available Assistance

Many of the features of Section 234(c) mortgage insurance are similar to those of FHA Section 203(b) for one to four-family homes. Down payment requirements are low because these FHA loans allow borrowers to finance up to 96.5 percent of their home loan and some of the closing costs can also be financed, further reducing up front costs. On a Section 234(c) loan, FHA sets limits on the size of the loan which vary with location and the number of units being purchased.

Restrictions

If the apartment is in a building that was converted from rental housing, insurance may not be provided under Section 234(c) unless:

the conversion occurred more than one year prior to the application for insurance.
the potential buyer or co-buyer was a tenant of that rental housing.
the conversion of the property is sponsored by a tenant’s organization that represents a majority of the households in the project.

Eighty percent of FHA mortgages in the project must be made to owner-occupants.

Eligibility

Any creditworthy persons who meet FHA underwriting criteria and are intending to occupy the condominium unit as their principal residence are eligible to apply.

Frequently Asked Questions

Most frequent questions and answers

Are FHA loans easy to obtain?

It is commonly said that FHA is easier to qualify for, when compared to conventional or “regular” home loans. There is some truth to this. But you’ll still need to have good credit.

What is a good credit score for a borrower?

The official minimum credit score for this program is 500, according to HUD. But mortgage lenders have the final say, and most won’t go that low when approving borrowers. Recent data suggest that 580-and-up is a good score for FHA.

What are the requirements for an FHA loan?

Some of the FHA loan requirements are

A minimum 3.5% down payment with a credit score of 580 or above, or a minimum 10% down payment with a credit score of 500-579.
Proof of employment and sufficient income.
A maximum debt-to-income ratio of 43%, with some exceptions.
The property must meet the HUD’s minimum safety standards.
Submission of the Uniform Residential Loan Application.

Should I lock my interest rate ?

An interest rate lock means that you’re guaranteed today’s mortgage interest rate for some predetermined period, typically 30 to 60 days. If interest rates have been trending upward, it’s generally a good idea to lock in your rate. While the prevailing mortgage rate doesn’t usually make a big move in a month or two, it’s certainly possible.

How much can i borrow with an FHA loan?

The maximum amount you can borrow through an FHA loan depends on where you live and the type of property you are buying.

You can click here to find the loan limit for your county, but the maximum loan amount on single-unit properties ranges from $314,827 in the lowest-cost areas of the country to $727,525 in the highest-cost areas. For four-unit properties, the maximum loan amount ranges from $605,525 to $1,397,400.

All reverse mortgages taken out through the Home Equity Conversion Mortgage (HECM) program are subject to the same $726,525 limit, no matter where you live.

What are the different kinds of FHA loans?

There are several different types of FHA loans available, including:

Fixed-rate or adjustable-rate loans
Reverse mortgages through the HECM program
Section 245(a) loans, with monthly payments that start small and increase over time, which can be helpful for people who expect their income to rise
The Energy Efficient Mortgage program (EEM), which finances home improvements that improve your home’s energy efficiency
203(k) loans, which help you rehabilitate a property by financing the cost of repairs and improvements.

Can I use an FHA loan to puchase a flip home?

There is no requirement that you have to reside in your home for any amount of time and nothing the stops you from paying your FHA loan off early, so it is possible to use an FHA loan to buy a house and quickly sell it.

However, you cannot use an FHA loan to buy a property that is being resold within 90 days of the prior purchase. And if it has been 91-180 days since the prior purchase, you will need to pay for a second appraisal if the sales price is more than 100% of the price paid by the prior buyer.

In other words, you can use an FHA loan to buy a property that you want to flip, but there are restrictions around using an FHA loan to buy a property that has been flipped.

Can I buy a second home or investment property with an FHA loan?

You can purchase a second home with an FHA loan, but only with substantial documentation that you meet a strict set of requirements. Those requirements include the lack of any other second homes, verification that it will not be used as a vacation home and proof that the commute to work from your primary home is an undue hardship and that there are not affordable rental opportunities within 100 miles of your workplace.

FHA loans are not allowed for investment properties. However, you can take out an FHA loan on certain 2-4 unit properties, so it is possible to rent out some of the units on your property.

Can I have a cosigner?

Yes, you can have a cosigner on an FHA loan. Any cosigner must either be a U.S. citizen or have a principal residence in the U.S.

Can I use gift money with an FHA loan?

Yes, you can use gift money that you from family members, employers, charities, close friends and other government programs can be used in addition with an FHA loan, as long as you meet other guidelines and provide all of the correct documentation.

However, borrowers must meet the Minimum Required Investment (MRI) by bringing in enough of their own cash to the table to cover at least 3.5% of the home’s purchase price. This money can include certain gifts, but it cannot include any money from the seller or anyone who has a financial interest in the transaction, and it cannot include money that will have to be repaid.

Can i get an FHA loan after a foreclosure or bankruptcy?

FHA loans are generally not available within three years of a foreclosure, though you may qualify for an exception if you can prove the foreclosure was due to circumstances beyond your control and you have worked to reestablish good credit since the foreclosure.

If you filed Chapter 7 bankruptcy, you generally won’t be eligible for an FHA loan until two years have passed since discharge. If you filed Chapter 13 bankruptcy, you will generally be eligible for an FHA loan after one year of making payments on your payment plan. In both cases, exceptions can be made if you can show that the bankruptcy was due to circumstances beyond your control.