Question:

What are the FHA loan rules?

Answer:

FHA loan rules are quite flexible with the purpose of facilitating first time home buyers, as well as repeat homebuyers with lower or mediocre credit.

Most Common FHA Loan Rules

  • In order to qualify for an FHA loan you should be lawful resident of the United States with a valid social security number.
  • You should have sufficient income to cover your mortgage payments. The FHA lender will verify your income, assets, and liabilities.
  • There is no minimum credit score requirement but your past credit performance will be examined and your credit history will be verified in order to determine whether you will be approved for an FHA loan.
  • There is a maximum mortgage limit for loans that are insured by FHA. It depends on the county where the property is located. No FHA loan can be granted above the county limits.
  • FHA down payment requirements can be as low as 3% and gift is allowed to use towards the down payment.

In addition to the FHA loan rules above, have in mind when applying for a FHA loan that the loan appraisal will be much more extensive than that of a conventional loan, which could mean higher appraisal costs. On the other hand, an advantage of FHA loans is that you can include your closing costs in the loan amount; the same is valid for the FHA mortgage insurance.

FHA interest rates are very close to conventional loan rates and if you are a borrower with excellent credit you would probably be better with a conventional loan. However, FHA loan rules allow for borrowers with lower credit to qualify for much better rates with FHA loans than with conventional ones.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
Was this Mortgage QnA helpful?
Not at all
  • Currently 2.9/5 Stars
  • 1
  • 2
  • 3
  • 4
  • 5
Definitely
Add to this Answer

Mortgage QnA is not a common forum. We have special rules:

  • Post no questions here. To ask a question, click the Ask a Question link
  • We will not publish answers that include any form of advertising
  • Add your answer only if it will contrubute to the quality of this Mortgage QnA and help future readers
If you have trouble reading the code, click on the code itself to generate a new random code. Verification Code Above:
Bookmark and share this QnA: