An FHA Home Loan may get you into a home with a low down payment.

An FHA home loan is one option to discuss when buying a primary residence. Consider the down payment, closing costs and ongoing payment together. Your loan officer can help you compare FHA financing with other available programs based on your application and property.

What is an FHA Home Loan?

The Federal Housing Administration, part of HUD, insures FHA loans made by approved lenders. FHA does not make the loan directly. Eligible borrowers may qualify with a down payment as low as 3.5% of the purchase price. FHA home loan borrowers also pay mortgage insurance premiums.

FHA Home Loan Requirements

Both first-time homebuyers and experienced homebuyers may be able to qualify for an FHA loan and take advantage of a low down payment option with easier credit qualifying than conventional loans. However, there are several requirements FHA loan applicants must meet. These include:

• The home must be appraised by an FHA-approved appraiser and meet certain guidelines.
• The property must be a primary or principal residence, not a second home or an investment.
• The borrower must occupy the property as the borrower’s primary residence within 60 days of closing the loan.
• An FHA appraisal evaluates the property for lending purposes. A separate home inspection provides information about its condition and is not replaced by the appraisal.

Here are more specific FHA loan requirements:

FHA Home Loan Down Payments

HUD describes down payments as low as 3.5% for eligible borrowers. The amount required for your application depends on credit qualifications and lender requirements. Ask your loan officer how much cash you need for the down payment and closing costs, and which sources of funds can be used and documented.

FHA Home Loan Mortgage Insurance

Most FHA loans include an upfront mortgage insurance premium and an annual premium paid in monthly installments. The amount and duration depend on the loan’s characteristics and applicable FHA rules. Review HUD’s mortgage insurance guidance and ask for the premiums applicable to your specific loan. Include mortgage insurance when comparing the monthly payment and total cost with other loan options.

FHA Home Loan Limits

FHA mortgage limits vary by location and property unit count and are updated annually. Use HUD’s current FHA mortgage limits lookup for the county and year relevant to your purchase. The maximum program limit is not a guarantee of the amount you can borrow; approval also depends on your qualifications and the property.

Credit and Debt-to-Income Review

Credit history and debt-to-income ratio are separate parts of a mortgage review. Your debt-to-income ratio compares monthly debt payments with gross monthly income. A credit score does not determine the ratio. Ask your loan officer how the lender evaluates your income, debts and credit history together, and which documentation is required.

FHA Income Requirements

While the FHA doesn’t put many salary requirements to qualify for a loan, a borrower must prove that they have a steady employment history. Lenders might ask for W-2s, tax returns, and bank statements for verification purposes.

Comparing FHA Home Loan Options

FHA home loans are:

• Government-insured loans that allow borrowers to purchase a home with as low as a 3.5% down payment. Borrower must pay the premiums for this insurance, which is meant to protect the lender.
• Borrowers can also pay their FHA loans without risking pre-payment penalties.

Getting a loan to purchase a home can be frustrating, especially if you don’t know the right procedures to follow. But there’s no need to worry. We are here to help you out. Please don’t hesitate to contact us today to get started.

**This company is not affiliated with or acting on behalf of or at the direction of FHA, VA, USDA or the Federal Government.

Explore FHA home loan options with Sympli Mortgage

Discuss your goals and questions with our loan officers, compare home loan options, or use our mortgage calculator to explore estimates. Program availability, eligibility and terms vary by lender and borrower qualifications. Verify company and individual licensing through NMLS Consumer Access.