What is an FHA Loan? Complete Guide to FHA Loans, Zillow, fha mortgage loans.#Fha #mortgage


What is an FHA Loan? – The Complete Consumer Guide

In this article:

An FHA loan is a mortgage that’s insured by the Federal Housing Administration (FHA). They are popular especially among first time home buyers because they allow down payments of 3.5% for credit scores of 580+. However, borrowers must pay mortgage insurance premiums, which protects the lender if a borrower defaults.

Borrowers can qualify for an FHA loan with a down payment as little as 3.5% for a credit score of 580 or higher. The borrower s credit score can be between 500 579 if a 10% down payment is made. It s important to remember though, that the lower the credit score, the higher the interest borrowers will receive.

The FHA program was created in response to the rash of foreclosures and defaults that happened in 1930s; to provide mortgage lenders with adequate insurance; and to help stimulate the housing market by making loans accessible and affordable for people with less than stellar credit or a low down payment. Essentially, the federal government insures loans for FHA-approved lenders in order to reduce their risk of loss if a borrower defaults on their mortgage payments.

FHA Loan Requirements

For borrowers interested in buying a home with an FHA loan with the low down payment amount of 3.5%, applicants must have a minimum FICO score of 580 to qualify. However, having a credit score that’s lower than 580 doesn’t necessarily exclude you from FHA loan eligibility. You just need to have a minimum down payment of 10%.

The credit score and down payment amounts are just two of the requirements of FHA loans. Here’s a complete list of FHA loan requirements, which are set by the Federal Housing Authority:

  • Borrowers must have a steady employment history or worked for the same employer for the past two years.
  • Borrowers must have a valid Social Security number, lawful residency in the U.S. and be of legal age to sign a mortgage in your state.
  • Borrowers must pay a minimum down payment of 3.5 percent. The money can be gifted by a family member.
  • New FHA loans are only available for primary residence occupancy.
  • Borrowers must have a property appraisal from a FHA-approved appraiser.
  • Borrowers front-end ratio (mortgage payment plus HOA fees, property taxes, mortgage insurance, homeowners insurance) needs to be less than 31 percent of their gross income, typically. You may be able to get approved with as high a percentage as 40 percent. Your lender will be required to provide justification as to why they believe the mortgage presents an acceptable risk. The lender must include any compensating factors used for loan approval.
  • Borrowers back-end ratio (mortgage plus all your monthly debt, i.e., credit card payment, car payment, student loans, etc.) needs to be less than 43 percent of their gross income, typically. You may be able to get approved with as high a percentage as 50 percent. Your lender will be required to provide justification as to why they believe the mortgage presents an acceptable risk. The lender must include any compensating factors used for loan approval.
  • Borrowers must have a minimum credit score of 580 for maximum financing with a minimum down payment of 3.5 percent.
  • Borrowers must have a minimum credit score of 500-579 for maximum LTV of 90 percent with a minimum down payment of 10 percent. FHA-qualified lenders will use a case-by-case basis to determine an applicants credit worthiness.
  • Typically borrowers must be two years out of bankruptcy and have re-established good credit. Exceptions can be made if you are out of bankruptcy for more than one year if there were extenuating circumstances beyond your control that caused the bankruptcy and you ve managed your money in a responsible manner.
  • Typically borrowers must be three years out of foreclosure and have re-established good credit. Exceptions can be made if there were extenuating circumstances and you ve improved your credit. If you were unable to sell your home because you had to move to a new area, this does not qualify as an exception to the three-year foreclosure guideline.
  • The property must meet certain minimum standards at appraisal. If the home you are purchasing does not meet these standards and a seller will not agree to the required repairs, your only option is to pay for the required repairs at closing (to be held in escrow until the repairs are complete).

See today s rates for FHA loans on Zillow Fha mortgage loans

Benefits of FHA Loans: Low Down Payments and Less Strict Credit Score Requirements

Typically an FHA loan is one of the easiest types of mortgage loans to qualify for because it requires a low down payment and you can have less-than-perfect credit. For FHA loans, down payment of 3.5 percent is required for maximum financing. Borrowers with credit scores as low as 500 can qualify for an FHA loan.

Borrowers who cannot afford a 20 percent down payment, have a lower credit score, or can’t get approved for private mortgage insurance should look into whether an FHA loan is the best option for their personal scenario.

Another advantage of an FHA loan it is an assumable mortgage which means if you want to sell your home, the buyer can “assume” the loan you have. People who have low or bad credit, have undergone a bankruptcy or have been foreclosed upon may be able to still qualify for an FHA loan.

Mortgage Insurance is Required for an FHA Loan

You knew there had to be a catch, and here it is: Because an FHA loan does not have the strict standards of a conventional loan, it requires two kinds of mortgage insurance premiums: one is paid in full upfront -– or, it can be financed into the mortgage –- and the other is a monthly payment. Also, FHA loans require that the house meet certain conditions and must be appraised by an FHA-approved appraiser.

Upfront mortgage insurance premium (UFMIP) — Appropriately named, this is a one-time upfront monthly premium payment, which means borrowers will pay a premium of 1.75% of the home loan, regardless of their credit score. Example: $300,000 loan x 1.75% = $5,250. This sum can be paid upfront at closing as part of the settlement charges or can be rolled into the mortgage.

Annual MIP (charged monthly) — Called an annual premium, this is actually a monthly charge that will be figured into your mortgage payment. The amount of the mortgage insurance premium is a percentage of the loan amount, based on the borrower s loan-to-value (LTV) ratio, loan size, and length of loan:


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fha mortgages

FHA mortgages have always been the alternative to risky subprime mortgages. The underwriting guidelines for FHA mortgages are very flexible and as a result when your personal loan officer takes your applications and tries to approve it they will receive a response from their underwriting system on if you are Approved, Approved with Conditions, or Not approved.

Also no matter what your score you can get the same rate as someone with excellent credit who also applies for an FHA loan which means no matter what your credit grade you will be saving money.

Being approved with conditions can be as simple as making one of your credit cards current, or maybe a line of credit is still reporting after being closed. There can be a multitude of reasons and the situation is different for everyone. This is essentially your path to homeownership. Your loan officer will inform you on the conditions and it is up to you to meet them.

FHA has released guidelines on credit scores – with a 580 score considered to the be the minimum for approval without conditions. You can still get approved for a mortgage below 580 down to a 500 score but you would need to put a much greater downpayment and possibly resolve any issues around federal debt such as student loans that need to be made current before you can enjoy any FHA financing.

It is also important to note that many banks often have their own specific guidelines for FHA products. We try to match you with the best lenders that can help you.

In the lending industry anything below 640 is considered adverse or bad credit. Since we work with FHA loan officers which have access to these products that lend below 640 we are showing you a path to homeownership even if you have bad credit. There are limits on how bad your credit can be – for anyone below a 500 score there are no options until you can improve your credit.

For more information on how you best get a mortgage with bad credit ask your personal FHA loan officer about your path to homeownership.

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FHA Loans – 7 Crucial Facts About FHA Loans, fha mortgages.#Fha #mortgages


7 crucial facts about FHA loans

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What is an FHA loan?

Less rigorous lending standards and lower down-payment requirements make FHA loans popular with mortgage borrowers.

An FHA loan is a mortgage insured by the Federal Housing Administration. Borrowers with FHA loans pay for mortgage insurance, which protects the lender from a loss if the borrower defaults on the loan.

Why people get FHA loans

Because of that insurance, lenders can — and do — offer FHA loans at attractive interest rates and with less stringent and more flexible qualification requirements. The FHA is an agency within the U.S. Department of Housing and Urban Development.

Here are seven facts that borrowers should know about FHA loans.

Fha mortgages

Less-than-perfect credit is OK

Minimum credit scores for FHA loans depend on the type of loan the borrower needs. To get a mortgage with a down payment as low as 3.5 percent, the borrower needs a credit score of 580 or higher.

Those with credit scores between 500 and 579 must make down payments of at least 10 percent.

Know your credit score before you borrow. Check it today for free at myBankrate.

People with credit scores under 500 generally are ineligible for FHA loans. The FHA will make allowances under certain circumstances for applicants who have what it calls “nontraditional credit history or insufficient credit” if they meet requirements. Ask your FHA lender or an FHA loan specialist if you qualify.

Fha mortgages

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Minimum down payment is 3.5 percent

For most borrowers, the FHA requires a down payment of just 3.5 percent of the purchase price of the home. That’s a “huge attraction,” says Dennis Geist, senior adviser at Treliant Risk Advisors and formerly a vice president of government programs for another lender. In late 2014, Fannie Mae and Freddie Mac reduced minimum down payments to 3 percent from 10 percent, but such loans have limited availability.

FHA borrowers can use their own savings to make the down payment. But other allowed sources of cash include a gift from a family member or a grant from a state or local government down-payment assistance program.

Ready for a mortgage with a low down payment? Search now for an FHA loan.

Fha mortgages

Closing costs may be covered

The FHA allows home sellers, builders and lenders to pay some of the borrower’s closing costs, such as an appraisal, credit report or title expenses. For example, a builder might offer to pay closing costs as an incentive for the borrower to buy a new home.

Lenders typically charge a higher interest rate on the loan if they agree to pay closing costs. Borrowers can compare loan estimates from competing lenders to figure out which option makes the most sense.

Fha mortgages

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Lender must be FHA-approved

Because the FHA is not a lender, but rather an insurer, borrowers need to get their loan through an FHA-approved lender (as opposed to directly from the FHA). Not all FHA-approved lenders offer the same interest rate and costs — even on the same FHA loan.

Costs, services and underwriting standards will vary among lenders or mortgage brokers, so it’s important for borrowers to shop around.

Fha mortgages

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Two-part mortgage insurance

Two mortgage insurance premiums are required on all FHA loans: The upfront premium is 1.75 percent of the loan amount — $1,750 for a $100,000 loan. This upfront premium is paid when the borrower gets the loan. It can be financed as part of the loan amount.

The second is called the annual premium, although it is paid monthly. It varies based on the length of the loan, the loan amount and the initial loan-to-value ratio, or LTV. The following premiums are for loans of $625,500 or less.

Annual premiums for FHA loans

  • 30-year loan, down payment (or equity) of less than 5 percent: 0.85 percent
  • 30-year loan, down payment (or equity) of 5 percent or more: 0.80 percent
  • 15-year loan, down payment (or equity) of less than 10 percent: 0.70 percent
  • 15-year loan, down payment (or equity) of 10 percent or more: 0.45 percent

Fha mortgages

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You can borrow cash for repairs

The FHA has a special loan product for borrowers who need extra cash to make repairs to their homes. The chief advantage of this type of loan, called a 203(k), is that the loan amount is not based on the current appraised value of the home, but on the projected value after the repairs are completed.

A so-called “streamlined” 203(k) allows the borrower to finance up to $35,000 for nonstructural repairs, such as painting and replacing cabinets or fixtures.

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Financial hardship relief allowed

Of course, FHA insurance isn’t supposed to be an easy out for borrowers who are unhappy about their mortgage payments.

But loan servicers can offer some relief to borrowers who have an FHA-insured loan, have suffered a serious financial hardship or are struggling to make their payments. That relief might be in the form of a temporary period of forbearance, a loan modification that would lower the interest rate or extend the payback period or a deferral of part of the loan balance at no interest.


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CalHFA supports the needs of renters and homebuyers

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What’s New at CalHFA

  • Program Bulletin #2017-13 – Proposed Federal Tax Reform and the Uncertainty of Mortgage Credit Certificate Program
  • Press Release 2017-11-09 – CalHFA Launches New Path to Homeownership for Service Members and Veterans
  • Video – Cal-EEM + Grant helps homebuyers with $24,000 of energy upgrades
  • Press Release 2017-10-03 – CalHFA Increases Access to Manufactured Home Loans
  • Program Bulletin #2017-12 – Closing Document Revisions for MyHome Assistance Program and Extra Credit Teacher Home Purchase Program (ECTP) when combined with a CalHFA Government Insured/Guaranteed First Mortgage
  • Program Bulletin #2017-11 – CalHFA Launches New CalHFA VA Loan Program
  • Press Release 2017-09-14 – Michael Carroll is CalHFA s New Director of Multifamily Programs
  • Program Bulletin #2017-10 – Updated Sales Price Limits
  • Program Bulletin #2017-09 – Updated Income Limits for all CalHFA Conventional and FHA Loan First Mortgage Programs
  • Program Bulletin #2017-08 – Updates to Manufactured Housing Guidelines for All CalHFA FHA Loan Programs
  • Press Release 2017-07-11 – CalHFA Helps Hundreds with Free Homebuyer Education
  • Program Bulletin #2017-07 – Escrow Holdbacks Allowed and Name Change for the Notice of Conditional Approval
  • Get to know CalHFA and our programs by viewing our Video Library.
  • Enews announcements can be found on our Archived Page.

Hardship Foreclosure Assistance

  • Keep Your Home California programs are designed for homeowners who are struggling to pay their mortgages.

Fha mortgage insurance

  • The Home Affordable Refinance Program (HARP) is available on loans owned by Fannie Mae and Freddie Mac. If these loans were insured by the California Housing Loan Insurance Fund they may be eligible to have existing mortgage insurance transferred to a new refinance loan.

Other Information

  • Fha mortgage insuranceThe California Victims Compensation Board is available to help California victims of the October 1 shooting in Las Vegas. If you’ve lost a family member, been injured or attended the Route 91 Harvest Festival where this terrible tragedy occurred on Sunday night, CalVCB can provide financial assistance. Visit the California Victims Compensation Board website and news release for more information.
  • Public Notice: Environmental Assessment For Whittier Downey SE Apartments (300 MB)
  • Public Notice: Environmental Assessment For North San Pedro Studios
  • Public Notice: 2017 Mortgage Credit Certificate Program
  • Veterans Housing and Homelessness Prevention Program (VHHP)
  • 2014 California Affordable Housing Cost Study
  • Language Access Complaint Form /Formulario de queja de acceso por idioma

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FHA Appraisal Requirements – Best FHA Lender, fha mortgage requirements.#Fha #mortgage #requirements


FHA Appraisal Requirements

Over the past couple of years, I have heard numerous real estate agents steer people away from FHA mortgages. Some have stated in their MLS listings that the seller will not accept a buyer with FHA financing and others have told buyers that it isn’t a good idea to get an FHA loan. All of this because they think that FHA appraisal requirements are too tough.

Yes, this used to be quite true. FHA is the first to admit that historically their appraisal requirement heavily stressed the repair of minor property deficiencies.

However, this has changed.

FHA now permits an “as-is” appraisal for homes being financed with FHA loans that have minor property deficiencies resulting from deferred maintenance and normal wear and tear. In fact, the current FHA appraisal requirements have been in place since January 1, 2006

FHA Appraisal Requirements General Rules to Remember

For an easy reference to FHA Appraisal Requirements, think of the two S’s .

Safety – FHA underwriting guidelines require that lenders review the appraisal to see if the appraiser has made note of property conditions that will affect the health and safety of the occupants.

Soundness – FHA underwriting guidelines require that lenders review the appraisal to see if the appraiser has made note of property conditions that jeopardize the soundness and structural integrity of the property.

When an FHA appraisal is done on a home, they are looking to make sure that their aren t any safety hazards and that the house is structurally sound.

In Mortgagee Letter 05-48, FHA provides the following examples of minor property conditions that do not require automatic repair for existing properties:

  • Missing handrails
  • Cracked or damaged exit doors that are otherwise operable
  • Cracked window glass
  • Defective paint surfaces in homes constructed post 1978
  • Minor plumbing leaks (such as leaky faucets)
  • Defective floor finish or covering (worn through the finish, badly soiled carpeting)
  • Evidence of previous (non-active) Wood Destroying Insect/Organism damage where there is no evidence of unrepaired structural damage
  • Rotten or worn out counter tops
  • Damaged plaster, sheetrock or other wall and ceiling materials in homes constructed post- 1978
  • Poor workmanship
  • Trip hazards (cracked or partially heaving sidewalks, poorly installed carpeting)
  • Crawl space with debris and trash
  • Lack of an all weather driveway surface

FHA also provided the following list of conditions that will require automatic repair for existing properties:

  • Inadequate access/egress from bedrooms to exterior of home
  • Leaking or worn out roofs (if 3 or more layers of shingles on leaking or worn out roof, all existing shingles must be removed before re-roofing)
  • Evidence of structural problems (such as foundation damage caused by excessive settlement)
  • Defective paint surfaces in homes constructed pre-1978
  • Defective exterior paint surfaces in home constructed post-1978 where the finish is otherwise unprotected.

These lists are not meant to be all inclusive, but they give clear guidance on the issues that are and are not a concern to FHA.

If you are interested in buying a house and you want to use an FHA loan for financing, don t let common misconceptions about FHA Appraisal Requirements misguide you.

IMPORTANT MORTGAGE DISCLOSURES:

When inquiring about a mortgage on this site, this is not a mortgage application. Upon the completion of your inquiry, we will work hard to match you with a lender who may assist you with a mortgage application and provide mortgage product eligibility requirements for your individual situation.

Any mortgage 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 mortgage credit product.

When applying for a mortgage credit product, 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 for mortgage refinancing.

Minimum credit ratings may vary according to lender and mortgage 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.

Mortgage.info is not a government agency or a lender. Not affiliated with HUD, FHA, VA, FNMA or GNMA. We work hard to match you with local lenders for the mortgage you inquire about. This is not an offer to lend and we are not affiliated with your current mortgage servicer.

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FHA Loans Requirements, Guidelines, Limits and Mortgage Rates – Ultimate Guide – Lending Expert Blog,


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Fha mortgage requirements

FHA Loans Requirements, Guidelines, Limits and Mortgage Rates Ultimate Guide

Fha mortgage requirementsFind out about requirements (including credit scores), guidelines, rates, loan limits, how to qualify and how to apply for an FHA Loan.

This post is limited to qualifying for FHA loans as a home buyer First Time or repeat. Click on this link if you are interested in reading about FHA Streamline Refinance.

What is an FHA Loan?

Federal Housing Administration (FHA) Loans are insured by Housing and Urban Development (HUD) which allows lenders to offer low downpayment loans to homebuyers like you. FHA loans have been helping people become homeowners since 1934. FHA insures loans for first time home buyer mortgage loan, FHA streamline refinance, FHA regular refinance, Cash-out refinance and also home purchase by people who are NOT first time home buyers. FHA however doesn t provide loan directly. You need to work with an FHA approved lender like Arcus Lending to qualify for the home purchase or refinance loan.

What is the credit score requirement for an FHA Loan?

While FHA guidelines allow for much lower credit scores, most of the lenders require a minimum of 640 fico score.

How to qualify for an FHA Loan?

You need to meet the following basic requirements for qualifying for an FHA loan (this is not an exhaustive guideline and a particular lender may even have their own set of guidelines):

  • Property must be owner occupied.
  • FHA loans are available for 1-4 units houses including single family residence, town-homes, condominiums and even manufactured homes.
  • A minimum downpayment of 3.5% is required. The downpayment can be gifted from parents, children, siblings or other close relatives.
  • Impound account is required on all FHA loan. As part of impound account, payment for property taxes and home insurance are broken down into monthly payments and are paid to the lender along with mortgage payments every month. The lender then makes a payment directly to county or your home insurance company when its due.
  • A two years employment history is required. However, if you went to school immediately prior to starting your employment, the school years can be counted towards two years requirement as long as your job is in the same field as your education.
  • You should have enough income to meet the maximum debt to income ratio requirement of 43%. In some cases, that ratio can be allowed to as high as 50%.
  • Upfront mortgage insurance (UFMIP) of 1.75% and annual mortgage insurance of 0.25% 0.65% is required on all FHA loans. For mortgage insurance premium rates and calculator, check this post.
  • FHA offers 30 year fixed, 15 year fixed and 5 year ARM loan.

What are FHA Loan limits?

For 2017, the FHA national floor loan limit for 1 unit house is $275,665. This means that all counties in the country will at least have this as their loan limit. FHA also classified several counties as high-cost meaning the loan limits in those counties are higher than $275,665. The maximum loan limits in some counties can be as high as $636,150 and in other counties it s between the floor i.e. $275,665 and the highest loan limit i.e. $636,150. Click here to find out the FHA loan limit for your county.

How to apply for an FHA Loan?

To get an FHA loan you need to work with an FHA approved lender. If you want to work directly with me to get pre-approved or get a rate quote you can complete the FHA rate quote form here or complete the full loan application here.


What is an FHA Loan? Complete Guide to FHA Loans, Zillow, fha mortgage.#Fha #mortgage


What is an FHA Loan? – The Complete Consumer Guide

In this article:

An FHA loan is a mortgage that’s insured by the Federal Housing Administration (FHA). They are popular especially among first time home buyers because they allow down payments of 3.5% for credit scores of 580+. However, borrowers must pay mortgage insurance premiums, which protects the lender if a borrower defaults.

Borrowers can qualify for an FHA loan with a down payment as little as 3.5% for a credit score of 580 or higher. The borrower s credit score can be between 500 579 if a 10% down payment is made. It s important to remember though, that the lower the credit score, the higher the interest borrowers will receive.

The FHA program was created in response to the rash of foreclosures and defaults that happened in 1930s; to provide mortgage lenders with adequate insurance; and to help stimulate the housing market by making loans accessible and affordable for people with less than stellar credit or a low down payment. Essentially, the federal government insures loans for FHA-approved lenders in order to reduce their risk of loss if a borrower defaults on their mortgage payments.

FHA Loan Requirements

For borrowers interested in buying a home with an FHA loan with the low down payment amount of 3.5%, applicants must have a minimum FICO score of 580 to qualify. However, having a credit score that’s lower than 580 doesn’t necessarily exclude you from FHA loan eligibility. You just need to have a minimum down payment of 10%.

The credit score and down payment amounts are just two of the requirements of FHA loans. Here’s a complete list of FHA loan requirements, which are set by the Federal Housing Authority:

  • Borrowers must have a steady employment history or worked for the same employer for the past two years.
  • Borrowers must have a valid Social Security number, lawful residency in the U.S. and be of legal age to sign a mortgage in your state.
  • Borrowers must pay a minimum down payment of 3.5 percent. The money can be gifted by a family member.
  • New FHA loans are only available for primary residence occupancy.
  • Borrowers must have a property appraisal from a FHA-approved appraiser.
  • Borrowers front-end ratio (mortgage payment plus HOA fees, property taxes, mortgage insurance, homeowners insurance) needs to be less than 31 percent of their gross income, typically. You may be able to get approved with as high a percentage as 40 percent. Your lender will be required to provide justification as to why they believe the mortgage presents an acceptable risk. The lender must include any compensating factors used for loan approval.
  • Borrowers back-end ratio (mortgage plus all your monthly debt, i.e., credit card payment, car payment, student loans, etc.) needs to be less than 43 percent of their gross income, typically. You may be able to get approved with as high a percentage as 50 percent. Your lender will be required to provide justification as to why they believe the mortgage presents an acceptable risk. The lender must include any compensating factors used for loan approval.
  • Borrowers must have a minimum credit score of 580 for maximum financing with a minimum down payment of 3.5 percent.
  • Borrowers must have a minimum credit score of 500-579 for maximum LTV of 90 percent with a minimum down payment of 10 percent. FHA-qualified lenders will use a case-by-case basis to determine an applicants credit worthiness.
  • Typically borrowers must be two years out of bankruptcy and have re-established good credit. Exceptions can be made if you are out of bankruptcy for more than one year if there were extenuating circumstances beyond your control that caused the bankruptcy and you ve managed your money in a responsible manner.
  • Typically borrowers must be three years out of foreclosure and have re-established good credit. Exceptions can be made if there were extenuating circumstances and you ve improved your credit. If you were unable to sell your home because you had to move to a new area, this does not qualify as an exception to the three-year foreclosure guideline.
  • The property must meet certain minimum standards at appraisal. If the home you are purchasing does not meet these standards and a seller will not agree to the required repairs, your only option is to pay for the required repairs at closing (to be held in escrow until the repairs are complete).

See today s rates for FHA loans on Zillow Fha mortgage

Benefits of FHA Loans: Low Down Payments and Less Strict Credit Score Requirements

Typically an FHA loan is one of the easiest types of mortgage loans to qualify for because it requires a low down payment and you can have less-than-perfect credit. For FHA loans, down payment of 3.5 percent is required for maximum financing. Borrowers with credit scores as low as 500 can qualify for an FHA loan.

Borrowers who cannot afford a 20 percent down payment, have a lower credit score, or can’t get approved for private mortgage insurance should look into whether an FHA loan is the best option for their personal scenario.

Another advantage of an FHA loan it is an assumable mortgage which means if you want to sell your home, the buyer can “assume” the loan you have. People who have low or bad credit, have undergone a bankruptcy or have been foreclosed upon may be able to still qualify for an FHA loan.

Mortgage Insurance is Required for an FHA Loan

You knew there had to be a catch, and here it is: Because an FHA loan does not have the strict standards of a conventional loan, it requires two kinds of mortgage insurance premiums: one is paid in full upfront -– or, it can be financed into the mortgage –- and the other is a monthly payment. Also, FHA loans require that the house meet certain conditions and must be appraised by an FHA-approved appraiser.

Upfront mortgage insurance premium (UFMIP) — Appropriately named, this is a one-time upfront monthly premium payment, which means borrowers will pay a premium of 1.75% of the home loan, regardless of their credit score. Example: $300,000 loan x 1.75% = $5,250. This sum can be paid upfront at closing as part of the settlement charges or can be rolled into the mortgage.

Annual MIP (charged monthly) — Called an annual premium, this is actually a monthly charge that will be figured into your mortgage payment. The amount of the mortgage insurance premium is a percentage of the loan amount, based on the borrower s loan-to-value (LTV) ratio, loan size, and length of loan:


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Which mortgage is right for you? Comparing conventional, FHA and VA loans

For most mortgage borrowers, there are three major loan types: conventional, FHA and VA. Here is how they compare.

1. Conventional loans

Who they’re for: Conventional mortgages are ideal for borrowers with good or excellent credit.

How they work: Conventional mortgages are “plain vanilla” home loans. They follow fairly conservative guidelines for:

  • Borrower credit scores.
  • Minimum down payments.
  • Debt-to-income ratios.

Debt-to-income ratio

Percentage of monthly income that is spent on debt payments, including mortgages, student loans, auto loans, minimum credit card payments and child support.

Cost: Lender fees, third-party fees, down payments, mortgage insurance and points can mean the borrower has to show up at closing with a sizable sum of money out of pocket.

Find out more about closing costs and how to save money.

What’s good: Conventional mortgages generally pose fewer hurdles than Federal Housing Administration or Veterans Affairs mortgages, which may take longer to process.

What’s not as good: You’ll need excellent credit to qualify for the best interest rates.

2. FHA loans

Who they’re for: Federal Housing Administration mortgages have flexible lending standards to benefit:

  • People whose house payments will be a big chunk of take-home pay.
  • Borrowers with low credit scores.
  • Homebuyers with small down payments and refinancers with little equity.

How they work: The Federal Housing Administration does not lend money. It insures mortgages.

The FHA allows borrowers to spend up to 56 percent or 57 percent of their income on monthly debt obligations, such as mortgage, credit cards, student loans and car loans. In contrast, conventional mortgage guidelines tend to cap debt-to-income ratios at around 43 percent.

For many FHA borrowers, the minimum down payment is 3.5 percent. Borrowers can qualify for FHA loans with credit scores of 580 and even lower.

Cost: Each FHA loan has two mortgage insurance premiums:

  • An upfront premium of 1.75 percent of the loan amount, paid at closing.
  • An annual premium that varies. Most FHA homebuyers get 30-year mortgages with down payments of less than 5 percent. Their premium is 0.8 percent of the loan amount per year, or $66.67 a month for a $100,000 loan.

What’s good: FHA loans are often the only option for borrowers with high debt-to-income ratios and low credit scores.

What’s not as good: To get rid of FHA premiums, you must refinance the loan.

3. VA loans

Who they’re for: Most active-duty military and veterans qualify for Veterans Affairs mortgages. Many reservists and National Guard members are eligible. Spouses of military members who died while on active duty or as a result of a service-connected disability may also apply.

How they work: No down payment is required from qualified borrowers buying primary residences. The VA does not lend money, but guarantees loans made by private lenders.

Cost: The VA charges an upfront VA funding fee, which can be rolled into the loan or paid by the seller. The funding fee varies from 1.25 percent to 3.3 percent of the loan amount.

The VA allows sellers to pay closing costs but doesn’t require them to. So, the buyer might need money for closing costs. Borrowers may need money for the earnest-money deposit.

What’s good: VA borrowers can qualify for 100 percent financing. Veterans do not have to be first-time buyers and may reuse their benefit.

What’s not as good: According to the VA, there isn’t a cap on the amount you can borrow. “However, there are limits on the amount of liability VA can assume, which usually affects the amount of money an institution will lend you. The loan limits are the amount a qualified veteran with full entitlement may be able to borrow without making a down payment. These loan limits vary by county, since the value of a house depends in part on its location.”


FHA Loans Requirements, Guidelines, Limits and Mortgage Rates – Ultimate Guide – Lending Expert Blog,


fha mortgage loans

Fha mortgage loans

FHA Loans Requirements, Guidelines, Limits and Mortgage Rates Ultimate Guide

Fha mortgage loansFind out about requirements (including credit scores), guidelines, rates, loan limits, how to qualify and how to apply for an FHA Loan.

This post is limited to qualifying for FHA loans as a home buyer First Time or repeat. Click on this link if you are interested in reading about FHA Streamline Refinance.

What is an FHA Loan?

Federal Housing Administration (FHA) Loans are insured by Housing and Urban Development (HUD) which allows lenders to offer low downpayment loans to homebuyers like you. FHA loans have been helping people become homeowners since 1934. FHA insures loans for first time home buyer mortgage loan, FHA streamline refinance, FHA regular refinance, Cash-out refinance and also home purchase by people who are NOT first time home buyers. FHA however doesn t provide loan directly. You need to work with an FHA approved lender like Arcus Lending to qualify for the home purchase or refinance loan.

What is the credit score requirement for an FHA Loan?

While FHA guidelines allow for much lower credit scores, most of the lenders require a minimum of 640 fico score.

How to qualify for an FHA Loan?

You need to meet the following basic requirements for qualifying for an FHA loan (this is not an exhaustive guideline and a particular lender may even have their own set of guidelines):

  • Property must be owner occupied.
  • FHA loans are available for 1-4 units houses including single family residence, town-homes, condominiums and even manufactured homes.
  • A minimum downpayment of 3.5% is required. The downpayment can be gifted from parents, children, siblings or other close relatives.
  • Impound account is required on all FHA loan. As part of impound account, payment for property taxes and home insurance are broken down into monthly payments and are paid to the lender along with mortgage payments every month. The lender then makes a payment directly to county or your home insurance company when its due.
  • A two years employment history is required. However, if you went to school immediately prior to starting your employment, the school years can be counted towards two years requirement as long as your job is in the same field as your education.
  • You should have enough income to meet the maximum debt to income ratio requirement of 43%. In some cases, that ratio can be allowed to as high as 50%.
  • Upfront mortgage insurance (UFMIP) of 1.75% and annual mortgage insurance of 0.25% 0.65% is required on all FHA loans. For mortgage insurance premium rates and calculator, check this post.
  • FHA offers 30 year fixed, 15 year fixed and 5 year ARM loan.

What are FHA Loan limits?

For 2017, the FHA national floor loan limit for 1 unit house is $275,665. This means that all counties in the country will at least have this as their loan limit. FHA also classified several counties as high-cost meaning the loan limits in those counties are higher than $275,665. The maximum loan limits in some counties can be as high as $636,150 and in other counties it s between the floor i.e. $275,665 and the highest loan limit i.e. $636,150. Click here to find out the FHA loan limit for your county.

How to apply for an FHA Loan?

To get an FHA loan you need to work with an FHA approved lender. If you want to work directly with me to get pre-approved or get a rate quote you can complete the FHA rate quote form here or complete the full loan application here.


FHA Loans – 7 Crucial Facts About FHA Loans, fha mortgage loans.#Fha #mortgage #loans


7 crucial facts about FHA loans

Fha mortgage loans

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What is an FHA loan?

Less rigorous lending standards and lower down-payment requirements make FHA loans popular with mortgage borrowers.

An FHA loan is a mortgage insured by the Federal Housing Administration. Borrowers with FHA loans pay for mortgage insurance, which protects the lender from a loss if the borrower defaults on the loan.

Why people get FHA loans

Because of that insurance, lenders can — and do — offer FHA loans at attractive interest rates and with less stringent and more flexible qualification requirements. The FHA is an agency within the U.S. Department of Housing and Urban Development.

Here are seven facts that borrowers should know about FHA loans.

Fha mortgage loans

Less-than-perfect credit is OK

Minimum credit scores for FHA loans depend on the type of loan the borrower needs. To get a mortgage with a down payment as low as 3.5 percent, the borrower needs a credit score of 580 or higher.

Those with credit scores between 500 and 579 must make down payments of at least 10 percent.

Know your credit score before you borrow. Check it today for free at myBankrate.

People with credit scores under 500 generally are ineligible for FHA loans. The FHA will make allowances under certain circumstances for applicants who have what it calls “nontraditional credit history or insufficient credit” if they meet requirements. Ask your FHA lender or an FHA loan specialist if you qualify.

Fha mortgage loans

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Minimum down payment is 3.5 percent

For most borrowers, the FHA requires a down payment of just 3.5 percent of the purchase price of the home. That’s a “huge attraction,” says Dennis Geist, senior adviser at Treliant Risk Advisors and formerly a vice president of government programs for another lender. In late 2014, Fannie Mae and Freddie Mac reduced minimum down payments to 3 percent from 10 percent, but such loans have limited availability.

FHA borrowers can use their own savings to make the down payment. But other allowed sources of cash include a gift from a family member or a grant from a state or local government down-payment assistance program.

Ready for a mortgage with a low down payment? Search now for an FHA loan.

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Closing costs may be covered

The FHA allows home sellers, builders and lenders to pay some of the borrower’s closing costs, such as an appraisal, credit report or title expenses. For example, a builder might offer to pay closing costs as an incentive for the borrower to buy a new home.

Lenders typically charge a higher interest rate on the loan if they agree to pay closing costs. Borrowers can compare loan estimates from competing lenders to figure out which option makes the most sense.

Fha mortgage loans

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Lender must be FHA-approved

Because the FHA is not a lender, but rather an insurer, borrowers need to get their loan through an FHA-approved lender (as opposed to directly from the FHA). Not all FHA-approved lenders offer the same interest rate and costs — even on the same FHA loan.

Costs, services and underwriting standards will vary among lenders or mortgage brokers, so it’s important for borrowers to shop around.

Fha mortgage loans

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Two-part mortgage insurance

Two mortgage insurance premiums are required on all FHA loans: The upfront premium is 1.75 percent of the loan amount — $1,750 for a $100,000 loan. This upfront premium is paid when the borrower gets the loan. It can be financed as part of the loan amount.

The second is called the annual premium, although it is paid monthly. It varies based on the length of the loan, the loan amount and the initial loan-to-value ratio, or LTV. The following premiums are for loans of $625,500 or less.

Annual premiums for FHA loans

  • 30-year loan, down payment (or equity) of less than 5 percent: 0.85 percent
  • 30-year loan, down payment (or equity) of 5 percent or more: 0.80 percent
  • 15-year loan, down payment (or equity) of less than 10 percent: 0.70 percent
  • 15-year loan, down payment (or equity) of 10 percent or more: 0.45 percent

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You can borrow cash for repairs

The FHA has a special loan product for borrowers who need extra cash to make repairs to their homes. The chief advantage of this type of loan, called a 203(k), is that the loan amount is not based on the current appraised value of the home, but on the projected value after the repairs are completed.

A so-called “streamlined” 203(k) allows the borrower to finance up to $35,000 for nonstructural repairs, such as painting and replacing cabinets or fixtures.

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Financial hardship relief allowed

Of course, FHA insurance isn’t supposed to be an easy out for borrowers who are unhappy about their mortgage payments.

But loan servicers can offer some relief to borrowers who have an FHA-insured loan, have suffered a serious financial hardship or are struggling to make their payments. That relief might be in the form of a temporary period of forbearance, a loan modification that would lower the interest rate or extend the payback period or a deferral of part of the loan balance at no interest.