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FHA Loans: Basic Features and Loan
Limits
by Lisa Phillips
May 2007
Limits
by Lisa Phillips
May 2007
The Federal Housing Administration (FHA) provides mortgage
insurance on loans made by FHA-approved lenders.
FHA insures mortgages on single family, multifamily and
manufactured homes. The mortgage insurance protects lenders
against loss if the homeowner defaults on the loan.
FHA will pay the lender if a homeowner defaults. It is the largest
insurer of mortgages and has insured over 34 million properties
since its inception in 1934.
2009 Guidelines (Beginning January 1, 2009):
FHA mortgage loan limits vary by State and Counties, with larger
loan amounts allowed in areas with higher housing costs. In areas
where 115 percent of the median house price is less than 65
percent of the conforming loan limit (the national floor), the limits are
as follows:
insurance on loans made by FHA-approved lenders.
FHA insures mortgages on single family, multifamily and
manufactured homes. The mortgage insurance protects lenders
against loss if the homeowner defaults on the loan.
FHA will pay the lender if a homeowner defaults. It is the largest
insurer of mortgages and has insured over 34 million properties
since its inception in 1934.
2009 Guidelines (Beginning January 1, 2009):
FHA mortgage loan limits vary by State and Counties, with larger
loan amounts allowed in areas with higher housing costs. In areas
where 115 percent of the median house price is less than 65
percent of the conforming loan limit (the national floor), the limits are
as follows:
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The information above is not guaranteed as the current economic
challenges have created a need for FHA to regularly adjust and
update mortgage loan limits. The most accurate information can be
found at https://entp.hud.gov/idapp/html/hicostlook.cfm for your
specific State and County.
Basic Features of an FHA Mortgage Loan
Low Down-Payment
FHA-insured loans require small down payments.
Flexibility in an FHA Loan
There is more flexibility in an FHA loan than conventional loans in
calculating household income and payment ratios. The cost of the
mortgage insurance is typically included in the monthly payment.
Less than Perfect Credit
FHA loans are generally easier to obtain. These loans have flexible
income, debt, and credit requirements to help borrowers qualify.
FHA can help a consumer qualify with less than perfect credit.
Unlike conventional loans, FHA views a consumer’s credit history
with reasonable credit underwriting and doe snot heavily rely upon
credit scoring.
Funds may be Gifted
Down payment and closing costs may be funded by a gift, grant or
by secured loan. That means a relative, a government agency, or
an approved non-profit organization can gift up to 100% of
borrower's down payment and closing costs.
Variety of FHA Loans Available
A variety of fixed-rate and adjustable-rate loan options are available.
Mortgage Insurance
Insurance from the federal government replaces private mortgage
insurance.
Types of Mortgage Loans
FHA provides two categories of mortgage loans:
Good Neighbor Next Door Sales Program
HUD offers a substantial incentive in the form of a discount of 50%
from the list price of the home in HUD designated revitalization
areas. In return you must commit to live in the property for 36
months as your sole residence. In order to qualify you must be one
of the following:
FHA loans can be used for construction financing, refinancing,
modernization, remodeling, equipment and expansion.
challenges have created a need for FHA to regularly adjust and
update mortgage loan limits. The most accurate information can be
found at https://entp.hud.gov/idapp/html/hicostlook.cfm for your
specific State and County.
Basic Features of an FHA Mortgage Loan
Low Down-Payment
FHA-insured loans require small down payments.
Flexibility in an FHA Loan
There is more flexibility in an FHA loan than conventional loans in
calculating household income and payment ratios. The cost of the
mortgage insurance is typically included in the monthly payment.
Less than Perfect Credit
FHA loans are generally easier to obtain. These loans have flexible
income, debt, and credit requirements to help borrowers qualify.
FHA can help a consumer qualify with less than perfect credit.
Unlike conventional loans, FHA views a consumer’s credit history
with reasonable credit underwriting and doe snot heavily rely upon
credit scoring.
Funds may be Gifted
Down payment and closing costs may be funded by a gift, grant or
by secured loan. That means a relative, a government agency, or
an approved non-profit organization can gift up to 100% of
borrower's down payment and closing costs.
Variety of FHA Loans Available
A variety of fixed-rate and adjustable-rate loan options are available.
Mortgage Insurance
Insurance from the federal government replaces private mortgage
insurance.
Types of Mortgage Loans
FHA provides two categories of mortgage loans:
- • Single Family (1-4 units homes)
• Multi-Family (5 or more units)
Good Neighbor Next Door Sales Program
HUD offers a substantial incentive in the form of a discount of 50%
from the list price of the home in HUD designated revitalization
areas. In return you must commit to live in the property for 36
months as your sole residence. In order to qualify you must be one
of the following:
• Law enforcement officers
• Pre-K through 12th grade teacher
• Firefighters
• Emergency medical technician
FHA loans can be used for construction financing, refinancing,
modernization, remodeling, equipment and expansion.
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In areas where 115 percent of the median house price exceeds the
"national floor", the limits are set at 150 percent of the national
conforming limit (the national ceiling). These limits are as follows:
"national floor", the limits are set at 150 percent of the national
conforming limit (the national ceiling). These limits are as follows:
There are special exceptions for the high cost areas of Alaska,
Hawaii, Guam and the Virgin Islands. The mortgage loan limits can
be adjusted up to 150% of the above ceilings to account for higher
costs of construction. The limits are as follows:
Hawaii, Guam and the Virgin Islands. The mortgage loan limits can
be adjusted up to 150% of the above ceilings to account for higher
costs of construction. The limits are as follows:
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