FHA Loans

High-Level Highlights:

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-For most scenarios, the maximum loan amount is $472,030.

-An FHA loan could be obtained with a credit score as low as 500, but generally, a minimum score of 580 is required.

-A down payment as low as 3.5%.

-The interest rate is almost always lower than on a Conventional loan.

-Available for primary residences only.

-Monthly mortgage insurance is required initially on all FHA loans and for the life of the loan in most cases.

-An FHA loan requires payment of a one-time fee called the “mortgage insurance premium” which is equal to 1.75% of the loan amount. This fee can be added to the loan amount.

-There is no maximum debt-to-income (DTI), but DTI is heavily factored into loan qualification.

Further Highlights:

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-Higher loan amounts available for multi-unit properties (no change in down payment required).

-An appraisal is always needed on a purchase or cash-out refinance, and never needed on a no cash-out refinance.

-Cash-out refinancing is available up to 80% loan-to-value (LTV).

-To do a no cash-out refinance, you must already have an FHA loan. This loan can be done without a credit pull, appraisal, or verification of employment/income. The FHA charges the mortgage insurance premium again, but it is reduced if the current FHA loan is less than 3yrs old – the newer the current loan, the greater the reduction.

-There is an FHA renovation loan program called the “203k Loan” which allows borrowers to buy a home and borrow the funds needed to complete renovations on the property after closing. This program is harder to qualify for, requires more documentation, and has higher interest rates than a standard FHA loan.

-For condos, the FHA requires the condo association be on their list of approved associations.