FHA LOANS
What is an FHA loan?
An FHA loan is a type of mortgage insured by the Federal Housing Administration (FHA), which is overseen by the U.S. Department of Housing and Urban Development (HUD).
While the government insures these loans, they’re underwritten and funded by FHA mortgage lenders.
FHA 203(k)
Allows homeowners to finance up to $35,000 for home repairs and improvement
Can be used to buy a fixer-upper and cover renovation costs
Energy-Efficient Mortgage
Allows homeowners to finance up to $35,000 for home repairs and improvement
Can be used to buy a fixer-upper and cover renovation costs
Cash-out Refinance
Allows homeowners to finance up to $35,000 for home repairs and improvement
Can be used to buy a fixer-upper and cover renovation costs
FHA Streamline Refinance
Allows homeowners to finance up to $35,000 for home repairs and improvement
Can be used to buy a fixer-upper and cover renovation costs
3.5%
Minimum Down Payment
1.75%
Upfront Mortgage Insurance
580
Minimum Credit Score
FHA Loan Requirements
- FHA credit score: As low as 580 with a 3.5 percent down payment or as low as 500 with a 10 percent down payment
- FHA down payment: At least 3.5 percent down if your credit score is at least 580, or at least 10 percent down if your credit score is between 500 and 579
- FHA debt-to-income (DTI) ratio: At most 43 percent (up to 50 percent in some cases)
- FHA occupancy rules: Primary residences between one and four units
- FHA mortgage insurance premiums (MIP): An upfront premium of 1.75 percent of the loan principal, typically paid at closing; plus annual premiums between 0.15 percent and 0.75 percent depending on down payment and loan amount and term, typically paid monthly.
Mahalo Mike and God bless 😇
There were some big hoops to jump through and you did it!
The clients are so happy to finally be in their new home here on Kauai; Congrats to you & your team 😊. Lisa
Frequently asked questions
Is an FHA loan right for me?
An FHA loan can help you get into a home even with poor credit and limited savings for a down payment. For that reason alone, it’s worth considering.
How do I apply for an FHA loan?
You’ll generally need to provide the past two years’ worth of Tax Returns, two of your most recent pay stubs, your driver’s license or other official identification and full statements of your assets (checking account, savings account, 401(k) and any other places you hold money).
How do FHA loans compare to other loan types?
Compared to conventional loans, FHA loans offer a more generous credit score threshold but similarly come with a mortgage insurance requirement. Compared to VA loans and USDA loans, FHA loans are open to anyone who qualifies. VA loans are only for active-duty military, veterans and surviving spouses, while USDA loans are only for low- to moderate-income homebuyers in certain rural areas
How do I get rid of FHA mortgage insurance?
Everyone who gets an FHA loan pays mortgage insurance. If you put down 10 percent or more, you can get rid of FHA mortgage insurance after 11 years. If you put down less than 10 percent, you’ll pay mortgage insurance until you pay off the loan, sell the home or refinance to a conventional mortgage.