FHA Loan Center

FHA Loan Center

In response to the growing housing situation in the United States, the loan limits for FHA loans have been temporarily raised. Depending on where you live you might find it even easier to qualify for a FHA loan.

Is a FHA Loan Right for You?
A FHA insured loan is a Federal Housing Administration mortgage insurance backed mortgage loan provided by a FHA-approved lender. FHA insured loans originated during the Great Depression of the 1930s as a means for lower income Americans to borrow money for the purchase of a home. FHA, as the insurer, promises to pay the lender if the borrower defaults on the loan. Because of this guarantee, lenders are willing to make mortgage loans at lower rates or larger amounts than they might otherwise.

To pay for the guarantee, an upfront mortgage insurance premium (MIP) of 1.5% of the loan amount is paid at closing, and, depending on the loan-to-value ratio, there may be a monthly premium as well.

Among the most basic benefits of an FHA loan are:

Easier to Qualify for – because they’re backed by the federal government, lending standards are less stringent.
Low Down Payment – FHA insured mortgages only require a 3% down-payment which makes it easier for people to own homes. Additionally the 3% can come in the form of gifts, unlike many other loan programs.
Lower Credit Borrowers Qualify – because FHA insured loans are backed by the government those with a poor credit history have an easier time getting this kind of loan.
Better Interest Rates – with the backing of the government, these loans typically have a better interest rate than most traditional mortgage loans.
Better Home Stability – the FHA has programs designed to help homeowners keep their homes during hard times and will work with you to help your home from falling into foreclosure.
No prepayment penalty (a big plus for subprime borrowers).
An FHA loan may be assumable.
Funding for home improvement (through FHA 203k programs)

FHA Qualifications

Proven employment status of at least 2 years.
Steady or increasing income over a 2 year period.
History of on-time payment. No more than two missed payments on your credit.
If you've filed for bankruptcy you must wait at least 2 years and have good credit since you filed.
Those with foreclosures must wait at least 3 years since the most recent foreclosure.
Monthly mortgage payment should be roughly 30% of your gross income.
You must pay a minimum of a 3% down-payment.
Agree to 2.25% in closing costs
Only certain properties are eligible - single-family homes, condominiums, double-wide manufactured homes, modular homes and 2-4 unit properties.
The property must be your primary residence.

Documents required when applying for an FHA:

Employment Info

Past two years completed tax returns.
Past two years W-2's, 1099's and any other necessary tax forms.
One month worth of newest pay stubs.
Self-employed will need three years tax returns and YTD Profit & Loss Statement.

Savings Info