Do you Qualify for an FHA Loan?


If you’re unsure if you might qualify for a mortgage, an FHA loan may be your solution. An FHA loan is a home mortgage that allows for a purchase of a primary residence with a low down payment and is insured by the Federal Housing Administration. Renovation loans and Refinancing is also available.

Benefits of FHA Loans
  • Less-than-perfect credit can be considered: FHA allows for people with a credit score of 580 or higher to potentially obtain financing. Borrowers who do not have FICO scores and can provide acceptable alternative credit have the possibility of qualifying. FHA has shorter waiting periods than conventional loans for borrowers who have had credit events, such as a bankruptcy, foreclosure or a short sale as long as they have re-established credit. FHA allows a relative to be a non-occupant co-borrower(s) to assist the borrower in qualifying.
  • Down payment requirements can be low: FHA’s minimum down payment can be as little as 3.5% on most types of properties. These mortgages are insured by FHA which allows borrowers to finance approximately 96.5% (excluding mortgage insurance) of the value of their home purchase in many cases.
  • Borrowers can make the down payment with a gift- The down payment can be 100% gift funds from a family member or in some cases a charitable organization. This is one of the key benefits to an FHA program. Verification of the source of gift money is required, and cash gifts are not allowed.
FHA Streamline Refinance Loan

FHA has streamline refinance loans that cut down on the amount of documentation required from the borrower and the underwriter. The basic requirements of a streamline refinance are:

  • The mortgage to be refinanced must already be FHA-insured
  • The mortgage to be refinanced should be current (not delinquent)
  • The refinance is to lower the borrower’s monthly principal and interest payments
  • No cash may be taken out on mortgages refinanced using the streamline refinance process
  • No appraisal no credit qualifying is available
Buying a fixer upper or upgrade your current home

An FHA 203(k) loan offers a solution to that problem by simply rolling the cost of those home improvements into your loan transaction. Once you’ve had an evaluation done on the estimated cost of the required repairs our mortgage professionals can factor that into the total loan amount along with any additional renovations removing the need for a hefty renovation budget.

There are two different types of FHA 203(k) loans, Standard and Limited, and both loan programs are a 30-year-fixed-rate mortgage. Standard 203 (k) loans are for homes that need structural repairs, the addition of a room, a complete tear down (must leave foundation) or rebuild. Standard 203 (k) loans are also for repair costs that exceed $35k regardless of the type of repair. A minimum of $5,000 in eligible repairs is required, from upgrading appliances to major renovations (no luxury improvements, like pools or landscaping are allowed).

Limited loans are for houses that need non-structural repairs, like paining, purchasing new appliances, kitchen and bathroom remodel, flooring, and air-conditioning.

Benefits of a FHA 203K Loan
  • One loan, closing and payment for both the mortgage to purchase or refinance the home and the funds needed for improvements.
  • Improvement funds are held in an interest-earning, escrow account and disbursed as the work is completed. On a limited, 50% is paid out to contractor 5 days after loan closing.
  • Can finance up to six months of mortgage payments into the loan if the home is determined to be uninhabitable during renovations (only on a Standard 203k)
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