Need help? (888) 508-6055

FHA Rules

Get a low rate FHA loan today.

I'm interested in:
Refinance Purchase

FHA Rules

An FHA loan usually requires the lowest down payment when purchasing a home, only 3.5% of the sales price. It also allows for lower scores than conventional loans, usually down to a 580. You may be able to roll your closing costs in to your loan. The home must be the borrower's primary residence. FHA is often the best loan program for first time home buyers. If you already have an FHA loan, you can refinance with FHA Streamline to lower your interest rate.

Start Online
Speak to a Loan Officer today  (888) 508-6055
Why Choose Us
Low Rates

We offer one of the industries lowest rates.

Secured Online Process

Upload loan documents and e-sign mortgage forms online.

Exceptional Customer Service

Your dedicated Loan Specialist will be your guide from application to closing.

Fast Financing

We’ll help you close quickly, so you can get the keys to your new home in no time.

How it works
Our real clients testimonials

Do you need an FHA home loan to purchase your home and are unsure of FHA loan requirements? FHA home loans are a great option for borrowers with credit challenges or lack the necessary down payment to qualify for a traditional mortgage loan. Here are the basic FHA loan qualifications and standards you need to meet to get your application approved.

FHA Loan Requirements for Credit and Down Payment

Have you struggled with credit challenges in the past and thought that homeownership was just out of reach? That is what is so great about the Federal Housing Administration (FHA) programs. The FHA promotes homeownership by mitigating risk for lenders from borrowers with past credit challenges or the lack of a down payment by requiring that FHA mortgage insurance be purchased on every home loan.

What are the FHA loan requirements for getting your application approved? Keep in mind that the minimum credit score for getting loan approval in the FHA program is not going to get you the best interest rate.

That is why it is so important to spruce up your finances prior to applying for an FHA mortgage. It’s not as difficult as it sounds. You can start by requesting free copies of your credit reports and checking them for accuracy. Errors in your credit reports have a significant negative impact on your credit score and you will need to dispute and allow enough time for a correction to be reflected in your credit score.

FHA guidelines specify the minimum credit score for loan approval is 620. The amount of down payment you will be required to make for an FHA loan is tied to your credit score. If your credit score is less than 620 FHA loan guidelines require a 10 percent down payment. Above 620 and the FHA down payment requirement drops to 3.5 percent of your home’s purchase price.

You will be required to document sufficient income and have a favorable debt ratio to qualify for an FHA loan. Income is typically documented using pay stubs or w-2s from your employer. If you have trouble documenting sufficient income to qualify due to self employment or investments stated income loans are making a comeback following the financial crisis. There are low doc and bank statement programs that can you the approval you need even if you have trouble documenting your income.

Additionally, FHA guidelines specify that the property must be owner occupied and your primary residence. 

FHA Loan Limits

You might be asking “How much can I borrow with an FHA home loan?” FHA guidelines for loan limits are set at 65% of the conforming loan limit. The limits for properties vary by county and if you live in a designated high cost area your limit will be higher. Contact one of our loan specialists for more information about loan options and limits in your area.

Are you feeling overwhelmed? Dedicated loan specialists can take the worry out of choosing the right options for your FHA mortgage. Contact us today and we’ll find the best loan for meeting your financial goals. 

FHA Mortgage Insurance

The reason the FHA can get borrowers with credit challenges that lack the necessary down payment for a conventional mortgage approved is the FHA requires that borrowers purchase mortgage insurance with the loan. 

This FHA insurance protects lenders from certain losses due to foreclosure. The downside of being required to purchase FHA mortgage insurance is that it does nothing to protect the borrower and drives up the amount of your monthly payments. This is why qualifying for the lowest possible interest rate and having he largest down payment possible is so important for getting a lower monthly payment on your FHA home loan. 

Do You Need the Lowest Monthly Payment?

In addition to your credit score the term length you choose determines your monthly payment. Your loan specialist can help you choose loan options to meet your financial goals. If you need a budget friendly payment amount choosing a 30 year term length with an adjustable rate can get you the lowest payment. 

You have the option of choosing a 15 year term length if you want to build equity as quickly as possible. The type of interest rate you choose also affects your payment amount. Adjustable rates come with lower, fixed introductory periods that change when the lender begins adjusting the interest rate. When the loan adjusts, your payment goes up or down based on prevailing interest rates.

There is always the risk of payment shock with adjustable rate mortgages; however, you do have the option of a streamline refinance to a more stable fixed interest rate when your credit score improves.

Streamline refinancing is another benefit of having an FHA home loan. The requirements for paperwork and processing time are greatly reduced and allow you to quickly take advantage of lower interest rates due to market changes or simply improving your credit score.

Comparison Shopping FHA Lenders

You might think that you don’t need to shop around for an FHA home loan because it’s a government program. According to a statement released by the Department of Housing and Urban Development, homeowners that compare at least three quotes when shopping for a lender save an average of $3,000 over the life of the loan. 

FHA home loans are no different, interest rates and fees vary widely from one FHA lender to the next. Investing a few hours to compare mortgage quotes can literally save you thousands of dollars. 

If you’re unsure how to get started comparison shopping FHA lenders, enlisting the help of a mortgage broker can fast track you to finding a home loan with the right options for meeting your financial goals. Remember that not all FHA loans are created equally. Combining the lowest rate available to you with the right options for interest rate and term length is necessary for meeting your short and long term financial goals with an FHA home loan.

Ready to get started? Contact one of our loan specialists today and we’ll get you on the path to meeting your financial goals through homeownership.