FHA Loans

FHA loans are mortgages that are insured by the federal government (Federal Housing Administration). You pay the mortgage insurance directly to the government, rather than paying it to a private mortgage insurance company.
FHA loans are EXTREMELY popular right now for a number of reasons:
  • The down payment is only 3.5% of the purchase price.
  • You can get the down payment as either a gift or a loan from a relative.
  • FHA rates are usually lower than the rates for other types of loans, and people with lower credit scores get the same rate as people with higher credit scores.
  • There are shorter waiting periods after bankruptcies, foreclosures, and short sales for FHA loans than there are for most other types of loans.
There are no income limitations for FHA loans.
You do not have to make less than a certain amount to qualify.
FHA loans are NOT just for first-time home buyers.

Borrower Eligibility

FHA loans are available to the following people:
  • Any US Citizen with a valid SS Number and 2 years of employment history (does not have to be the same job)
  • Permanent Resident Aliens with valid SS Number, 2 years employment history, and a Resident Alien Card
  • Non-Permanent Resident Aliens with Valid SS Number and an Employment Authorization Card
  • Non-occupying co-borrowers are allowed, as long as they are relatives of the primary borrower.  (Non-occupying co-borrowers are people who co-sign the loan, but do not intend to live in the house.)

Credit Requirements

We require a minimum credit score of 580 to get an FHA loan.  If your score is above 620, interest rates are lower, and it is much easier to get approved.
If you have had a bankruptcy, you need to wait 2 years from the discharge date to get an FHA loan.
If you have had a foreclosure, you need to wait 3 years from the recording date of the Public Trustee’s Deed.
FHA does not require you to pay off collection accounts, but if the total amount in collections is excessive (over $2,000), you may have to pay some of them off.

Mortgage Insurance

FHA loans have two kinds of mortgage insurance:
  1. Up-front mortgage insurance, which is usually included in the loan amount.
    Currently, it is 1.75% of the loan amount.
  2. Monthly mortgage insurance, which is paid every month as part of your mortgage payment.  If you have less than 5% down, the monthly mortgage insurance is currently .85% of the loan amount.  If you put 5% or more down, it is .80% of the loan amount.
If you put 10% or more down, the monthly mortgage insurance goes away after 11 years.
If you put less than 10% down, the monthly mortgage insurance never goes away, but it does go down slightly every year.

Download our full guide to FHA loans here!

Please do not hesitate to contact us regarding your home loan needs.
Our goal is to turn a confusing process into a quick, easy, and enjoyable experience.

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