FHA (Federal Housing Administration)

Many people think of FHA loans as restrictive and a last resort to "normal" financing. Here are some facts that may change your mind.

• Established in the 1930's for purchasing homes.
• One of the most successful federal programs in history.
• Credited with many innovative changes in mortgage lending (including the 30 yr Fixed Rate loan).

Why would you want an FHA loan?

• Low downpayment with high loan-to-value
• Cash-out refinances allowed
• The total downpayment can come from a gift
• No income limits or sales price restrictions
• Credit scores accepted down to 580 (600 for cash out refinances greater than 85%)
• Seller contributions may be as high as 6%
• Non-occupant Co-borrowers are allowed
• No required cash reserves
• Non-taxable income (including Child Support) may be "grossed-up"
• Borrower may be able to do streamlined refinance with a refund of MIP

What programs are available?

• Fixed rate (15 & 30 year)
• ARMs - 1 yr, 3/1, 5/1, 7/1 and 10/1 (Click for more information about ARMs)
• New specialized programs like High Loan Limits and Reverse (use the form at the bottom of the page to request more information)

Credit Scores

• All purchase and rate-term (aka, not cash-out) refinances, 580 minimum
• Cash-out refinances up to 85%, 580 minimum
• Cash-out refinances above 85%, 600 minimum
• Alternative credit is not available
• "No score" is not eligible

Property Flipping

• If the property is re-sold 90 days or fewer following the date of acquisition by the seller, the property is not eligible for an FHA loan. Exceptions are HUD and employer relocations.
• If the property is re-sold 91 to 180 days after acquisition:
• If a new sales price is greater than or equal to 100% of the previous sales price, a second appraisal is required and an explanation for increase.
• The borrower may not pay for the second appraisal
• If the property is re-sold 181 to 365 days after acquisition:
• FHA reserves the right to require more information if increase in re-sale is greater than or equal to 5% of the lowest sales price in preceding 12 months.

Bankruptcy and Foreclosure

• Bankruptcy
• Must be documented
• Chapter 7 must be released for a minimum of 2 years
• Chapter 13 required a 12 month satisfactory payment history
• Foreclosure
• Must be a minimum of 3 years

Loan Limits

• FHA loan amounts are limited by region. Please contact us to find out the limit in your area.

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