FHA Guidelines
Buying a home can be daunting, which is why it helps to be as informed as possible. Learn all about the FHA loan process and what it takes to get approved.
An FHA loan is insured by the Federal Housing Administration. It comes with low down payments for borrowers and protects lenders from financial risk if the borrower defaults on the loan. Lenders have to meet certain criteria for their mortgages to be termed "FHA-approved," and borrowers must also satisfy a number of requirements to qualify for one of these loans.
The FHA has a maximum loan amount that it will insure, based on county and the property size. These caps, known as the FHA Lending Limits, are updated annually and are influenced by the conventional loan limits set by Fannie Mae and Freddie Mac. FHA loan limits for single-family homes in 2025 range from $524,225 to $1,209,750.
A big selling point for FHA loans is the low credit score requirement. Homebuyers with insufficient credit histories, who find it difficult to qualify for conventional loans with higher minimums, can more easily meet the FHA's minimum credit requirement of a 580 FICO score. Learn about what goes into the make-up of you credit score, and how you can work to increase it.
As with any mortgage, you'll incur some fees that need to be paid at the closing of your home loan. These charges are collectively called closing costs and they typically amount to 3% of the loan amount. FHA closing costs encompass all the fees and charges owed at the closing of a mortgage, such as appraisal fees, inspection fees, deposit verification fees, and home inspection fees.
In order to continue backing home loans, the FHA collects a monthly Mortgage Insurance Premium. These funds are used to protect the lenders—in that case that FHA borrowers default on their mortgages—and to fund the agency itself. Homebuyers with an FHA loan pay an Upfront Mortgage Insurance Premium, as well as the Monthly Mortgage Insurance Premium.
It's important that the FHA ensures that borrowers are not signing up for mortgages they cannot reasonably afford, which is why it is mandated that all potential homebuyers' debt-to-income ratios fall within certain set maximums. This helps lower the number of foreclosures since borrowers aren't bound to a mortgage they cannot afford.
FHA Loan Articles
April 23, 2021No matter what kind of market you’re in, it is always best to get pre-approved before going to shop for houses. The last thing you want is to go look at homes, find the one you love, then have to wait on an approval and lose the dream home to another buyer.
April 11, 2021With the trend of falling interest rates since 2019, the number of mortgage refinances around the country has spiked and continues to rise. Borrowers with FHA loans can also capitalize on the low rates, but it may be possible to simplify the process with the FHA Streamline Refinance.
March 29, 2021The FHA helps first-time and low-income homebuyers by having lower down payment requirements for its borrowers. Despite this lower credit eligibility criteria set by FHA, it is important to remember that FHA-approved lenders can set their own requirements
March 24, 2021One of the major arguments people have for renting instead of buying is the large upfront cost of a down payment. Depending on the type of loan program you apply and are approved for, this could mean anything between 3.5% and 20% percent of your purchase price.
March 21, 2021The two basic types of home loans are fixed rate and adjustable-rate mortgages. The mortgage market offers many other options to homebuyers, but these two are the most common, and the first pair from which to pick.
March 15, 2021A key step in the mortgage process is the home appraisal. In the case of home purchase or refinance, this is a task that is almost always required by the lender, and it is important that potential homebuyers understand what, how, and why of a home appraisal.
