 |
|
|
|
The Federal Housing Authority (FHA) is part of the U.S. Department of Housing and Urban Development (HUD). The FHA does not actually lend money to borrowers. What the FHA does is insure loans (called 203(b) Mortgage Insurance) so that they are shielding lenders from loss should a borrower default on the loan. This effectively reduces the lender's risk allowing them to provide easier qualification for a loan, lower down payments, and lower closing costs. So an FHA Loan is a loan made by a lender that is insured by the FHA.
Features of FHA Loans
FHA loans are an excellent vehicle for the first-time home buyer. FHA loans are available as fixed rate mortgages (FRMs) and adjustable rate mortgages (ARMs). Some of the features of an FHA loan include:
Qualifying for an FHA Loan
Because an FHA loan is insured by the FHA, many of the qualification criteria are not as stringent as they would be. The borrower does, however, have to be able to afford the loan. For that reason, a borrower's monthly housing costs should not exceed 29% of their monthly income (this is some times referred to as the housing ration). Remember that total housing costs include mortgage principal and interest, property taxes, and homeowner's insurance (often referred to as PITI).
In addition, a borrower's monthly expense to to cover all debt, home and consumer debt (car loans, personal loans, student loans, credit cards, etc.) should not exceed 41% of their monthly income.
To obtain an FHA loan, individuals need to apply to a HUD approved lender.
FHA Loan Limits
FHA loan limits vary by location. It should be noted, however, that FHA loans are oriented toward lower-income borrowers. As such, the FHA loan limits make an FHA loan appropriate only for lower cost homes. For example, the FHA loan limits for a couple of sample cities are:
| Boston, MA | Wichita, KS | |
|---|---|---|
| 1-Family | $362,790 | $200,160 |
| 2-Family | $461,113 | $256,248 |
| 3-Family | $560,231 | $309,744 |
| 4-Family | $646,421 | $384,936 |
To look up the FHA loan limits in your area see: https://entp.hud.gov/idapp/html/hicostlook.cfm
Other HUD Loan Programs
HUD also has other specialized programs to help certain identified groups purchase a home. These programs include:
For More Help
To get more advice on FHA and other HUD loan programs, contact a HUD-approved housing counselor or call (800) 569-4287.
Get multiple quotes. Choose the best rate. No obligation.
Common Mortgage Types
• Adjustable Rate Mortgage
• Fixed Rate Mortgage
• Understanding Arm Indexes
Government Mortgages
• FHA Loans
• HCFP Loans
• VA Loans
• State Housing Financing
Home Equity Loans
• Home Equity Line Of Credit
• Obtaining Equity From Your Home
• Reverse Annuity Mortgage
• Second Mortgages
More Resources
• Mortgage And Lender FAQ
• Mortgage Information Search
Mortgage Process
• Avoiding A Jumbo Mortgage
• Avoiding Private Mortgage Insurance
• Dealing With Credit Issues
• Glossary Of Mortgage Terms
• Mortgage Application Process
• Mortgage Laws And Regulations To Protect The Consumer
• Shopping For A Mortgage
• Understanding Credit
New Home Mortgage
• How Much House You Can Afford
• How Much Should You Put Down On A Home
• Mortgage Pre Qualification And Pre Approval
• Mortgages For Purchasing A Home
Refinancing A Home
• Refinancing Your Home
Related Products And Services
• Mortgage Life Insurance
• Private Mortgage Insurance
• Title Insurance
Specialty Mortgages
• Alt A Mortgages
• Balloon Mortgage
• Bridge Loan
• Construction Loan
• Eighty Twenty Mortgages
• Graduated Payment Mortgage
• Growing Equity Mortgage
• Interest Only Mortgage
• Low Doc No Doc Mortgages
• Subprime Loan
AL
AK
AZ
AR
CA
CO
CT
DE
DC
FL
GA
HI
ID
IL
IN
IA
KS
KY
LA
ME
MD
MA
MI
MN
MS
MO
MT
NE
NV
NH
NJ
NM
NY
NC
ND
OH
OK
OR
PA
RI
SC
SD
TN
TX
UT
VT
VI
VA
WA
WV
WI
WY
Assurity Financial Services LLC
Financial Freedom Senior Funding Corp
First Horizon Home Loan Corporation
Pinnacle Financial Corporation
Copyright © 2004-2008. All Rights Reserved. Moving Traffic, Inc., operator of CityTownInfo.com, is not a broker or a lender, and all offers for loans or mortgages found on this site are made solely by the advertiser.
