What Is An FHA Home 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.

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.

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.

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.

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.

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.