FHA (Federal Housing Administration) Loans

Updated January 2018

FHA loans are insured by the Federal Housing Administration (FHA). They are geared towards helping moderate to low income families buy their homes. FHA-insured loans are available for single-family and multifamily residences, manufactured homes and some health –related facilities.  If a homeowner with an FHA-insured loan defaults on his or her mortgage payment, then the FHA will pay the lender thus lenders bear less risk in making FHA loans. However, borrowers must meet certain requirements to qualify for an FHA loan.

FHA Mortgage Rates

Need help with the latest FHA mortgage rates or FHA lenders? Visit our mortgage rates page that has information on FHA mortgage rates and FHA Lenders.

FHA Loan Requirements

To qualify for an FHA loan, you must have legal residency in the United States and a valid social security number. Also, you must be of a legal age to sign on a mortgage in your state.

In addition, the lender will also look into the these factors:

  • Credit: Credit score speaks about your ability and willingness to make future payments to the lender. It is derived from your past data or history of financial payments and considered as an indicator of your financial health. For a conventional loan, your credit history is usually the most important factor that lenders consider. With an FHA loan, it’s not the primary factor. Usually, the FHA requires a one-year period of acceptable credit during which you ought to have regularly made all your payments. But if you have not developed a credit history then alternative credit verification will be used that may include your insurance payments, rental payments, and utility payment records.
  • Income: The loan amount for which you can qualify depends on your monthly income and ability to pay back monthly and annual payments. Although FHA aims is to help low- and middle-income families get a mortgage loan, they still consider your income level as basis to decide on your ability to repay your loan. Thus, all your income is calculated to ensure that it is sufficient to cover the mortgage and other related obligations. The stability of income and the chances of continuance of payment are also analyzed.
  • Debt to income ratio: This ratio compares an individual’s debt payments to the income he/she generates. This ratio shows how much income goes toward expenses and how much is left at the end of each month. This ratio is a very important tool to know how much a borrower can afford and his ability to make mortgage payments.

FHA Loan Limits

FHA Loan limits differ from state to state. We have collected the FHA Loan limits for all the states for your reference.

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When applying for a loan, lenders will commonly require you to provide a valid social security number and submit to a credit check. Consumers who do not have the minimum acceptable credit required by the lender are unlikely to be approved. Minimum credit ratings may vary according to lender and loan product. In the event that you do not qualify for a credit rating based on the required minimum credit rating, a lender may or may not introduce you to a credit counseling service or credit improvement company who may or may not be able to assist you with improving your credit for a fee. Any loan product that a lender may offer you will carry fees or costs including closing costs, origination points, and/or refinancing fees. In many instances, fees or costs can amount to several thousand dollars and can be due upon the origination of the loan product.

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