Flexible qualification to help middle- and low-income buyers.
The National Housing Act of 1934 created the Federal Housing Administration (FHA) to help first-time buyers and lower income Americans purchase a home. Today, the US Department of Housing and Urban Development (HUD) insures FHA loans.
The FHA loan is a low down payment mortgage that provides flexible qualification options to buyers who marginally qualify under conforming loan programs. It is popular with first-time and middle-to-low income buyers.
The most popular FHA loan program is the 203(b) fixed rate mortgage loan. This loan helps middle- to low-income buyers compete in high-demand areas (San Luis Obispo County) by offering loose credit guidelines and flexible down payment options.
- Down payment: as low as 3.5%
- Credit score: as low as 550
- Debt-to-income ratio: as high as 47% housing ratio and 57% total debt ratio
- Gift payments: allowed; 100% can be a gift from a relative, non-profit, or government agency
- Rate and Term: fixed and adjustable rate options
- Ceiling: $417,000 ($561,200 for high balance in San Luis Obispo County; $625,500 for high balance in SB County)
- Occupancy: primary residence only
- Mortgage Insurance: yes; up front and monthly fees apply (Read more)
The 203(k) mortgage loan offers funds for home rehabilitation and renovation. Borrowers can get unlimited funding for cosmetic repairs and functional upgrades.
- Roof, gutter, and downspouts replacement and repair
- Heating, ventilation, plumbing, electrical, septic replacement and repair
- Painting, flooring, and weatherization
- Purchase and installation of appliances.
The FHA Streamline Refinance is a simple way for FHA borrowers to lower their monthly mortgage payment by refinancing into a lower mortgage rate. Borrowers must display a history of consistent payments, and reduce their monthly payments by 5%. No appraisal, no income qualification, no asset documentation.
The FHA back-to-work program offers buyers the ability to purchase a home just 12 months after a negative credit event. Otherwise:
- Foreclosure: 3 years from transfer of title date
- Short Sale: 3 years from relinquished date
- Bankruptcy (Chapter 7): 2 years from discharge date
- Bankruptcy (Chapter 13): 2 years from discharge date; 1 year payout has elapsed & payment performance is satisfactory & BK approval
- Deed-in-Lieu: 3 years from transfer of deed date
- Credit: Minimum 530 FICO (limits to LTV/CLTV may apply)
- Loan Term: Fixed Rate Mortgage (FRM): 10 – 30 year terms
- Max LTV: 580+ FICO and No Score: 96.5% LTV calculated per FHA Guides
<580 FICO: Maximum 90% LTV
- Occupancy: Owner Occupancy Only
- Propery Eligibility:
- New Construction: Modular (off-frame only), Manufactured (double-wide or larger), and Traditional Construction.
- Manufactured Homes: Engineer must certify foundation plans meet FHA guides. Must be titled as real property or have recorded affixation affidavit.
- Loan may include simultaneous purchase of the land/lot or loan can be guaranteed for the construction of home on land/lot already owned by borrower.
- Credit History: Borrowers with traditional credit histories and credit scores will be underwritten on their own merits. Non-traditional and derogatory credit history considered… (Read more)