FHA Loan Requirements

 

Important FHA Guidelines for Borrowers

The FHA, or Federal Housing Administration, provides mortgage insurance on loans made by FHA-approved lenders. FHA insures these loans on single family and multi-family homes in the United States and its territories. It is the largest insurer of residential mortgages in the world, insuring tens of millions of properties since 1934 when it was created. Learn more about FHA loan requirements and guidelines.

FHA Requirements

 

Mortgage Insurance for FHA Insured Loan

Mortgage insurance is a policy that protects lenders against losses that result from defaults on home mortgages. FHA requirements include mortgage insurance primarily for borrowers making a down payment of less than 20 percent.

 

FHA FICO Score Facts

 

A borrower with FICO scores at or higher than 580 would be eligible, in the eyes of the FHA, for maximum financing. Those with scores between 500 and 579 are eligible for a maximum FHA financing amount of 90% of the loan-to-value ratio, which means the borrower would be required by the FHA to make a 10% down payment. Those with scores below 500 are not eligible for FHA loans.

Participating FHA lenders can and do have more strict FICO score rules than what you see mentioned above. Bottom line--loan applicants who do not meet the minimums listed above can’t be approved for an FHA home loan or can’t be approved for maximum financing depending on the circumstances as detailed above.

In many cases you may find lenders with credit score requirements between 620 and 640. Borrowers with credit on the margins of what’s acceptable to a lender may be required to make a bigger down payment or have other compensating factors that work in the borrower’s favor.

Another misconception about the FHA loan program is that it is only meant to be used by first-time homebuyers, or that it is only for borrowers who have low incomes. But in reality there are no minimum OR maximum income limits established for FHA loans.

You can’t earn “too much” with the FHA loan program--there’s no maximum income requirement, and anyone who credit-qualifies is eligible to apply.

 

FHA Loan Types (examples)

 

Choose from Several FHA Mortgage Programs

 

Fixed Rate FHA Loan

 

An FHA loan benefits those who would like to purchase a home but haven't been able to put money away for the purchase, like recent college graduates, newlyweds, or people who are still trying to complete their education.

Conventional Conforming Fixed Rate Loans are fixed in 15, 20, 25, or 30 year terms with the interest rate remaining fixed for the life of the loan. These loans follow the strictest guidelines for eligibility in terms of loan amounts. They are not assumable and may not contain a prepayment penalty.*

 

Energy Efficient Mortgage

 

Energy Efficient Mortgages can be used to make energy-efficient improvements in one- or two-unit existing and new homes. The improvements can be included in a borrower's mortgage only if their total cost is less than the total dollar value of the energy that will be saved during their useful life. The cost of the improvements that may be eligible for financing as part of the mortgage is either 5 percent of the property's value (not to exceed $8,000) or $4,000, whichever is greater. View the current FHA loan limits.

 

FHA 203K loan

 

FHA’s 203(K) loan program allows new home buyers and existing homeowners to finance the cost of repairs and improvements that need to be performed on their single-family homes. FHA program requires the property to be a primary residence of the borrower.. Basically a home improvement loan. 

 

2014 FHA Limits

 

Lending Limits for FHA Loans for California State

 

RIVERSIDE County

RIVERSIDE-SAN BERNARDINO-ONTARIO, CA

Single
$355,350

Duplex
$454,900

Tri-plex
$549,850

Four-plex
$683,350