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FHA Mortgage

What advantages do FHA Mortgages offer when compared to Conventional Loans?

FHA mortgage loans contain many additional benefits and protections that cant be obtained through other home loan programs.

FHA Mortgages have more flexible credit requirements
FHA mortgage loan requirements aren't completely driven by a borrowers credit score, though they will usually need at least a 620 middle FICO score to get approved through most lenders. While FHA mortgage guidelines are more flexible than other home loan programs, there are still basic requirements that must be met.

FHA Mortgages have low interest rates and low mortgage insurance
FHA Mortgage interest rates are usually better than other comparable loan programs and they carry low mortgage insurance costs to the borrower.

FHA Mortgages require smaller down payments
FHA Mortgages have a low 3.5% down payment requirement and it is possible for the money to be gifted from a family member, employer or charitable organization.

What factors determine FHA Mortgage eligibility?

To be eligible FHA Mortgage approval, your monthly housing costs (mortgage principal and interest, property taxes, and insurance) must be less than a specified percentage of your gross monthly income (31% ratio). You must also have enough income to pay your housing costs plus all of your additional monthly debt (43% ratio). These ratios can be exceeded somewhat with compensating factors like a high credit score. Your credit background will be looked at carefully. Generally speaking, a 620 middle FICO credit score or higher is required for approval.

Read more about FHA Mortgage Requirements.

What is the maximum FHA Mortgage amount that I can borrow?

The maximum amount for an FHA home loan may be determined by several factors:

Maximum Loan Amount: The maximum loan amount allowed for an FHA Mortgage varies from county to county. The largest maximum FHA Mortgage amount in certain high-cost areas today is $729,750. In most areas, the lower maximum FHA Mortgage limit of $271,050 will apply. You can see what the exact limit is in the county in which you're interested here: https://entp.hud.gov/idapp/html/hicostlook.cfm. This site includes FHA loan limits for all 50 states..

Maximum financing: Depending on the state where the property is located, the maximum FHA Mortgage amount will be 97.75% of the appraised value of the home for a refinance loan or 96.5% of the lower of its selling price or the appraised value for a purchase.

How much money is required for the down payment and closing costs?
FHA Mortgage Loans require the home buyer to invest at least 3.5% of the sales price in cash for the down payment and closing costs. For example, if a home has a sales price of $100,000, the borrower must invest at least $3,500 toward a down payment. It is possible for the buyer to utilize gifted money from family members towards the down payment..

Can I get an FHA Mortgage after bankruptcy?
Criteria for FHA mortgage approvals state that if you have been discharged from a Chapter 7 bankruptcy for two years or more, you are eligible to apply for an FHA mortgage. If you are currently in a Chapter 13 bankruptcy that has not been discharged and you've made all of your court approved payments on time for at least a year, you may be able to get an approval.

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 FHA Mortgage FAQ's

What is an FHA Loan?
An FHA loan provides low-cost insured home mortgage loans that suit a variety of purchasing and refinancing options.

What are FHA Loan Limits?
Today's maximum FHA Loan Limits are determined by the area where the subject property is located.

How can I qualify for an FHA Loan?
You must obtain correct FHA Mortgage Information to determine if you could qualify for today's FHA Mortgage Insurance guidelines. Certain FHA Loan Credit Score and FHA Mortgage Income guidelines must be met.

What are current FHA Mortgage Fees?
The FHA has a list of allowed fees that can be charged to the borrower on FHA Loans. These fees are referred to as allowable closing costs, and can vary from lender to lender. The FHA Loan MIP (Mortgage Insurance Premium) amounts to 1.75% of the loan amount and in usually financed in the mortgage.

Do FHA Loans have Mortgage Insurance?
FHA Loans have Monthly Mortgage Insurance on loans with a term of greater than 15 years and a loan-to-value ratio of 90% or greater (meaning you are borrowing more than 90% of the value of the home). FHA Mortgage Insurance (MI) is not considered FHA Loan PMI, because it is not provided by a private mortgage insurance company like on Conventional Loans. When comparing the monthly mortgage insurance rates on an FHA Mortgage vs Conventional Mortgage PMI, the FHA MI Rates are usually better.



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