FHA Home Loans

What is an FHA loan?

FHA home loans are mortgages insured by the federal government through the Federal Housing Administration (FHA), a branch of the Department of Housing and Urban Development. FHA home loans reduce the barrier to entry for homebuyers and refinancers by featuring low down payments, flexible credit requirements and more purchase power. If funds are limited, an FHA home loan can help you finance more than 80% of your home value.

What are FHA loan requirements?

In order to ensure that you meet the minimum FHA loan requirements, you need to consider the following factors.

  • Are you over the age of 18?
  • Do you have a valid Social Security number and lawful residency in the United States?

    Do you have a steady employment history? If not, have you at least worked for the same employer for the past two years?

    Can you afford the minimum down payment of 3.5% or 10% (depending on credit score)?

    Do you have a credit score above 580?

    Have you been out of bankruptcy for at least the past two years? (If the answer is no, there may still be exceptions that can be made on a case-by-case basis.).

    Will this home be your primary residence?

You’ll likely need to be able to answer all of these questions with a hearty ‘YES’ in order to meet FHA home loan requirements.

The FHA home loan advantage

FHA home loans are backed by the federal government and offer you a myriad of advantages for your home purchase or mortgage refinance.

Minimum down payment option of 3.5% for qualified buyers
For those with credit scores of 580 and above, the down payment for an FHA loan is 3.5%. (For those with credit scores below 580, a 10% down payment is required.)

Easier to qualify
FHA requirements are, typically, less strict than typical loans. Although a credit score below 580 does not allow you to take advantage of the 3.5% down payment option, conventional lenders require a minimum credit score of 620 or higher.

No maximum income restrictions

Seller assistance with up to 6% of closing costs
FHA home loans allows the seller to pay up to 6% of the closing costs, including any costs of the appraisal, title expenses and a credit report.

203k renovation loans with a minimum 620 FICO score.
If you need extra cash to repair or renovate your home, FHA offers 203(k) loans that offer you loans based not on the current appraised value of the home, but the projected value after these renovations would take place. The extra money you receive from the loan after the purchase of the home can then go towards these renovations. This can be used to cover painting, roofing, plumbing, heating and air-conditioning and full room remodels. This is generally only eligible for those with a credit score of 620, more along the lines of a minimum credit score for a conventional loan.

Loan limits adjusted annually
FHA home loans have a maximum loan amount (or “ceiling”) that is regularly adjusted every year and vary according to the cost of living in a given area. In 2019, the ceiling for FHA home loans is $726,525. This annual adjustment increases your likelihood of getting an FHA home loan that meets your current needs.
With an FHA loan, you can use borrowed money and other gifts from family members to cover down payments and closing costs. And don’t worry about prepayment penalties! An FHA loan lets you refinance or pay off your home early without having to deal with extra fees or other sticking points. As long as you meet FHA requirements, an FHA home loan may be within your future!.

Why trust eHomeFunding with your FHA loan?

FHA loans are our specialty. From coast to coast, we’ve helped hundreds of thousands of people secure great FHA loans since 2000. Apply now—we’ll review your options and help you find the best fit!