FHA Loan Information

FHA loans reflect the Federal Government's commitment to expanding homeownership and home buying opportunities through reduced down payment requirements, mortgage insurance charges, and relaxed underwriting standards when compared to conventional mortgage loans.

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Advantages of FHA Loans

  • Lower down payment requirements.
  • FHA loans are assumable* with a qualified borrower.
  • Higher qualifying ratios of 29% for housing and 41% for total indebtedness on existing construction.
  • Higher qualifying ratios of 31% for housing and 43% for total indebtedness on new construction.
  • More flexible underwriting standards.
  • Gift funds for down payment and closing costs are allowed.
  • Up-front Mortgage Insurance Premium can be financed.
  • Less cash out of pocket required.
  • The lowest down payment requirement of any non-subsidized financing program, as low as 3%, and never more than 5%.
  • Non-occupant co-borrowers are allowed for qualifying purposes.
  • Seller is allowed to pay prepaid expenses.
  • Seller can contribute up to 6% of purchase price toward closing cost.
  • Seller can contribute up to 6% of purchase price toward discount points
  • Charges on conventional loans such as tax service fees, underwriting fees, copy & courier fees are not allowed to be charged to the buyer with FHA loans.
  • With FHA’s no cost streamlined refinancing you can lower your payment at NO COST to you... usually the closings can occur within 2-3 weeks.
  • Rehabilitate your house with only one loan using the FHA 203K program.
  • The FHA ARM has the best features on the market with a 1% annual interest rate cap and a 5% lifetime cap.

The FHA loan program is an outstanding choice for the first time homebuyer because the program requires only 3% cash input into the transaction, which may be a gift, and is significantly more forgiving of past credit issues.

For more information about the U.S. Department of Housing and Urban Development refer to our HUD Information Page.

For more information on specific programs that are available, go to Key HUD Programs.

FHA Loan Credit Requirements

Specifically, only the last two years of your credit history are looked into, and any credit problems can generally be overcome with sufficient explanations and supporting documents of why the issues occurred. You should never rule yourself out of qualifying for an FHA home loan or mortgage because of past credit issues

Credit issues that require the passage of time before you can qualify for a FHA loan are limited to the following...

  • Two years from the date of discharge for a bankruptcy
  • Three years from the date of foreclosure

FHA also requires any outstanding collection accounts, judgments, and charge off's to be paid in full before closing.

If you have had credit difficulties in the past, the following compensating factors can often get your loan approved.

Compensating Factors for FHA Home Loans

If payment or combined monthly debt payments are higher than the limits prescribe by HUD, the loan may be approved with the following compensating factors in place to support borderline loan applications:

  • Energy efficient dwelling
  • Less than a 10% increase from old rent or house payments
  • Excellent savings ability as shown by savings accounts or other
  • Cash reserves that are not part of a gift
  • Limited use of credit
  • Potential for increased earnings
  • Income that cannot be used as qualifying income
  • A larger than minimum down payment

Please understand that although good credit, steady income and residual income are not compensating factors, they certainly are part of the overall credit evaluation.

For more information on specific programs that are available, go to Key HUD Programs.

FHA Home Mortgage Loan Information

This is just one more way that Home Loan US makes loan and mortgage shopping safe, friendly, and secure right from the comfort of your own home. If you are a veteran or active duty military personal you may be eligible to receive FHA Loans, FHA Home Loans, or FHA Mortgage Loans with NO or little down payment.

For more FHA Information go to our FHA Loans page

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