What is it? The FHA loan is a loan for a mortgage that is backed & insured by the Federal Housing Administration (FHA). The basic idea is that the federal government insures loans for FHA-approved lenders so they can reduce their risk of loss if the person borrowing the loan ends up in default on their mortgage payments.

FHA loans - everything you need to know

FHA Loan Credit Requirements

You will need a minimum 620 credit score. Your middle score of the 3 reporting bureaus is determined as a score for qualification. If you are using a co-borrower the lower of the two middle scores is used for qualification.

What is the FHA Minimum Down Payment?

FHA loans require a minimum down payment of 3.5% of the purchase price.
The down payment can come from gift funds ***restrictions apply***

*Debt to Income ratio is capped at 55% in most circumstances

What Are FHA Loan Seller Concessions?

The seller can contribute 6% of the purchase price to apply towards closing cost, pre-paids and other fees associated with a mortgage.

What About the Mortgage Insurance Premium (MIP) For FHAs?

You need to know that FHA loans require upfront and monthly MIP. The upfront fee is 1.75% of the purchase price and is financed into the loan.

You do not have to pay this out of pocket.

The monthly MIP is based on down payment and Finance terms such as 30yr fixed or 15yr fixed. Depending on the type of FHA loan it can fall off after 11 years or can be for the entire term of the loan.

What about Non Occupants or Co-Signors on FHA loans?

You can have a non occupying borrower who can co-sign on the loan to help qualify. Both your credit and the co-signors credit must be acceptable, but their income will be counted to help qualify.