FHA Loans Explained

Jan 29, 2021

If you’re a first-time homebuyer or a buyer with a higher debt-to-income ratio, a FHA loan may be right for you! An FHA insured loan is a US Federal Housing Administration mortgage insurance backed mortgage loan which is provided by an FHA-approved lender. FHA insured loans are a type of federal assistance and have historically allowed lower income Americans to borrow money for the purchase of a home that they would not otherwise be able to afford.

To obtain mortgage insurance from the Federal Housing Administration, an upfront mortgage insurance premium (UFMIP) equal to 1.75 percent of the base loan amount at closing is required and is normally financed into the total loan amount by the lender and paid to FHA on the borrower's behalf. There is also a monthly mortgage insurance premium (MIP) which varies based on the amortization term and loan-to-value ratio. 


FHA loan guidelines are currently as follows:

  • 580 Min FICO
  • Max Loan Amount $331,760 (varies per county)
  • 3.5% Minimum Down Payment
  • Terms: 15 or 30 Years
  • Income/Debt Ratio: 31% Housing/43% Total Debt
  • Seller Contributions:
    • Up to 6% of Sales Price


Other important information:

  1. Mortgage insurance is required.
  2. Upfront fee is 1.75% of the base loan amount and can be added back to mortgage.
  3. Monthly fee is .85% times the base loan amount divided by 12.
  4. Seller must pay Tax Service Fee, Termite Inspection and/or Repairs.


* InterLinc Mortgage Services, LLC. NMLS ID: 205696. InterLinc is an Equal Housing Lender. DISCLAIMER: This is not a commitment to lend. Credit and collateral are subject to approval. Other restrictions may apply. Programs, rates, terms and conditions are subject to change without notice. www.nmlsconsumeraccess.org