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  • David Cade

Homebuyers & FHA Loans


FHA loans are a great option for a lot of home buyers, particularly if they’re buying their first home. The loans are secured by the Federal Housing Administration, which helps potential home buyers secure financing by offering less restrictive requirements than traditional conventional loans.


I have a quick guide of some of the requirements you can expect when going with an FHA loan such as down payment, mortgage insurance, DTI (debt-to-income) requirements, and FHA loan limits.


1. Down Payment of 3.5%

Your down payment for an FHA loan depends on your credit score. For the 3.5%, you will need a 580 credit score or higher. There are higher down payment requirements for credit scores below 580, speak with your lender to see what you qualify for.


2. Allows a higher debt-to-income ratio

Your debt-to-income ratio is how lenders determine how much you can afford by comparing the amount of money you make versus what you owe. The factor includes all your recurring debts, including installment loans (auto, college, etc.), and credit cards (revolving).


3. Mortgage Insurance

Because the federal government insures the loan, you will have to pay what is called upfront mortgage insurance (MIP). Your lender will be able to give you the exact fee percentage for your specific loan. Unlike Conventional loans which removes MIP once you have more than 20% equity, FHA loans MIP is for the life of the loan unless you refinance to a different type of loan later.


4. FHA Loan Limits

The Federal Housing Administration will only insure loans up to a certain maximum limit. It is based on the area you live. In most areas, the max is $420,680 but in areas where the cost of living is more, it can be up to $970,800. To get the most up-to-date info on the limits you can go to Hud.gov


If you need assistance or have any questions regarding a home mortgage please let us know we would be glad to help.

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