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FHA loan

Learn what an FHA loan is and who it supports.
Discover the benefits of an FHA loan.
Find out the requirements to qualify for an FHA loan.

What is an FHA Loan?

FHA home loans are government-backed mortgage loans that are insured against default by the Federal Housing Administration (FHA).

FHA loans can be used to help both single- and multiple-family homes. They also allow banks to continuously lend mortgage loans to homeowners without much risk or capital requirements.

The Federal Housing Administration (FHA) doesn't issue loans or set its interest rates. They just guarantee payments against default. For that reason, some people refer to it as an FHA-insured loan. You'll be paying for that guarantee through mortgage insurance premium payments to the FHA.

FHA mortgage loans support individuals who are not qualified for a conventional mortgage loan, especially for those buying their homes for the first time. FHA mortgage loans provide low-minimum down payments, fair credit expectations, and reasonable income requirements.

WHAT ARE THE BENEFITS OF AN FHA LOAN?

An FHA loan is easier to obtain. However, regardless of the amount of your down payment, you will still have to pay for mortgage insurance. Here are other benefits that you can get from an FHA loan:
Low credit score
An FHA loan has a lower minimum credit score of 500 compared to other loan options.
Insured and flexible 
The FHA loan program is government-insured and offers flexible qualification guidelines created specifically for first-time homebuyers.
Minimum down payment
With an FHA loan, you can purchase a home with as little as 3.5% down payment with a credit score of 580+. If your credit score is 500 to 579, you will have to pay a 10% down payment. It also can be gifted from an acceptable donor.
FHA closing cost options
When you buy a home, you will be responsible for certain out-of-pocket expenses, such as loan origination fees, attorney fees, and appraisal costs. However, FHA mortgage loans allow the seller, home builder, or lender to pay some of these closing costs for you. If the seller is having a hard time finding a buyer, they might just offer to help you out on the closing cost as a deal sweetener.

FHA LOAN QUALIFICATIONS

FHA loan eligibility is often perfect for first-time home buyers since the program was created with them in mind. But even if you are no longer a first-time buyer, the requirements are still appealing.

500 credit score

Even with just a 500 credit score, you can already be eligible for an FHA loan.

3.5% down payment

A minimum down payment of only 3.5% is required if your credit score is 580+.

No Homeownership

No previous homeownership in the last 3 years

Primary residence

The home you are buying with an FHA loan must be your primary residence for the next 12 months.

front-end debt ratio

Your monthly mortgage debt payments (front-end debt ratio), should not be over 31% of your gross monthly income. In some cases, lenders may allow up to 40%.

back-end debt ratio

Your mortgage, plus all monthly debt payments (back-end debt ratio), cannot be over 43% of your gross monthly income. However, in some cases, lenders may allow up to 50%.

Stable employment

A stable employment background history, or proof that you have been working for at least 2 years with the same employer.

income verification

You must show your income verification through pay stubs, bank statements, and federal tax returns.
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What are the FHA loan limits?

FHA mortgage loans have outside limits on how much you can borrow. These limits are set according to the region where you live, with low-cost areas having a lower limit and high-cost areas having a higher limit.

There are special exception areas, which are mostly islands and isolated locations, like Alaska, Hawaii, Guam, and the U.S. Virgin Islands. Areas with a very high construction cost would make it possible for the limits to go even higher.

In general, the U.S. Dept. of Housing and Urban Development determined that the FHA loan limit is set at 115% of the median home price in the county.

Unfortunately, FHA changes the limit amounts each year due to changing home prices.

WOULD YOU LIKE TO QUALIFY FOR AN FHA LOAN?

Are you getting frustrated because you don't know where to start?

JUST PROVIDE US WITH THE PROPER DOCUMENTATION

And OUR MORTGAGE BROKERS WILL DO THE HARD WORK FOR YOU

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WE WORK WITH THE MOST POPULAR MORTGAGE PACKAGES

Selecting the right mortgage loan is very important. As mortgage brokers we make sure you get the best deal available for your home loan.

Conventional Loan

No PMI required with a 20% down payment.
Can be used for a wide range of property types.
Higher loan limits than some government-backed programs.
Flexible loan terms with adjustable-rate and fixed-rate options.
Learn more

VA Loan

100% financing available with full VA entitlement.
No private mortgage insurance required (PMI).
No prepayment penalty.
Guaranteed by the government.
Lenders have limitations.
Loans are assumable.
Learn more

FHA Loan

Low minimum credit score of 500.
Government-insured Loan program.
Flexible qualification for first-time homebuyers.
3.5% down payment with a credit score of 580+.
Closing costs could be paid by the seller, home builder, or lender.
Learn more

USDA Loan

0% down payment or lower down payment than other loan products.
Low private mortgage insurance (PMI).
Easier qualifying requirements for those with lower credit scores.
Can finance 100% of the home's purchase price.
Learn more
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