USDA Loans Defined
October 9, 2018
Employee of the Month – April Smitherman
October 12, 2018

FHA Loans Defined

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:

CREDIT SCORE

MINIMUM 640

MAXIMUM LOAN AMOUNT

$294,515 (varies per county)

MINIMUM DOWN PAYMENT

3.5%

TERMS

15 OR 30 YEARS

INCOME/DEBT RATIO

31% HOUSING / 43% TOTAL DEBT

SELLER CONTRIBUTIONS

UP TO 6% OF SALES PRICE

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

*Information as of 10/3/2018. All of the above information is subject to change or may have additional requirements.