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FHA Home Loan Financing

FHA Mortgage Basics

FHA home loans are most commonly thought of as a first time home buyer loan.  I think that it's true that many first time home buyers use FHA financing.  The fact is, you need only buy a primary residence, and not necessarily buying your first home, even though buying your first home with a FHA loan is quite common.

FHA loans are available with a credit score of 560, sometimes lower if you have a larger down payment.  The credit score flexibility in addition expanded debt to income ratios makes FHA financing a favorite of anyone looking for a break when financing a home.

FHA Borrower Requirements

  • You must live in the home as a primary residence
  • FICO as low as 600 allowed without loan to value and debt to income restrictions
  • Credit scores as low as 560 allowed with loan to value and debt to income restrictions
  • Full income / asset documentation only - W2 and/or tax returns
  • 3.5% minimum down payment
  • 100% down payment can be gift
  • Approved buyer assistance can be used up to 100% combined loan to value
  • Maximum 46.99% front end, 56.99 back end debt to income (DTI) ratio with automated underwriting approval

Loan Terms

  • 30 Year Fixed
  • 15 Year Fixed
  • 5/1 ARM – Adjustable Rate Mortgage
  • Upfront Mortgage Insurance Premium can be financed into loan amount
  • Annual Mortgage Insurance Premium (paid monthly)

Property Requirements

Properties eligible for FHA finaning include:

  • 1 family residence – single family residence (SFR)
  • 2 family residence – duplex (owner must occupy one unit)
  • 3 family residence – triplex (owner must occupy one unit)
  • 4 family residence – fourplex (owner must occupy one unit)
  • Single family Condominium – with HOA approval
  • Single family Townhouse – with HOA approval

Loan Limits

The maximum loan amount allowed when using an FHA insured mortgage is determined by the County you live in.  Loan amounts can also vary based on the number of units in the property.

Search FHA Loan Limits in California by County

Waiting Periods after Credit Hardship

  • 2 Years from Discharge of Chapter 7 Bankruptcy
  • 1 Year from Discharge of Chapter 13 Bankruptcy
  • 3 Years from Foreclosure, Short Sale or Deed in Lieu of Foreclosure

Special FHA Programs