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FHA loans are one of the best options for young, first-time home buyers who have not had as much time to save for a large down payment or establish a high credit score.

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FHA Loan Basics: Acceptable Property Types


FHA Loan Basics: Acceptable Property Types
FHA loans, insured by the Federal Housing Administration, are a popular choice for many homebuyers, especially those who need a lower downpayment or more forgiving credit qualifying requirements.

Eligible Homes

FHA loans are primarily intended for primary residences—homes that borrowers will occupy as their main dwelling. This includes single-family homes, townhouses, and even multi-unit properties like duplexes or triplexes, provided the borrower lives in one of the units. 

Condominiums can also be eligible, but the project must be FHA-approved or added to the approved list. It must also meet specific owner-occupancy rates, financial reserves, and insurance coverage standards. 

In some cases, a condo unit may be approved for an FHA loan even without being on that list. Ask your lender about this option.

Manufactured homes can also qualify but must adhere to HUD Code manufacturing standards and be permanently attached to a foundation.

However, certain property types are not eligible for FHA financing. 

No Investment Properties

Investment properties purchased solely for rental income, vacation homes, and commercial properties are not eligible for FHA financing.

Additionally, properties in disrepair may not qualify for an FHA purchase loan unless the necessary repairs are completed before closing. Such properties may qualify for an FHA rehabilitation mortgage, and this is an option worth considering.

Standard FHA loans are not designed for extensive renovations. The FHA 203(k) loan offers a solution for purchasing and rehabilitating a fixer-upper. This program has specific guidelines regarding eligible repairs and cost limitations.

There’s No One-Size-Fits-All FHA Mortgage

It's important to recognize that FHA loans for different property types have unique requirements. For example, condominium projects undergo a more rigorous approval process, including a review of the project's financial documents and governing rules. 

Manufactured homes must meet specific construction and safety standards, and depending on the circumstances, there may be restrictions on financing homes located on leased land.

Understanding the nuances of FHA loans and eligible property types is crucial for prospective homebuyers. 

It is always recommended that you consult with an FHA-approved lender to discuss your individual circumstances and find the most suitable loan program for your needs.
 
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FHA Loan Articles

Questions to Ask About an FHA Home Loan Before You Apply

Planning your FHA loan means asking some important questions early in the process.  The most obvious question is associated with the type of home you want. How large a house do you need? FHA mortgages allow the purchase of homes with between one and four living units.

Planning and Saving for a New Home

There are tons of reasons why people decide that they’re done with renting and start looking into buying a home. Whatever your reason, deciding to buy a home is a big step, and one of the most daunting aspects is saving up enough money for the down payment.

Ready To Apply for an FHA Loan?

Before you get ready to commit to a home loan application, it’s good to review your circumstances and ask a few basic questions about your loan, your plans, and the home itself. Believe it or not, knowing what type of home loan you need is an important step.

Fixing Your Credit Score

When getting ready to shop for a home loan, it's worth taking a look at your credit report. Your credit score is a big factor when lenders take a look at your loan application, and it plays a huge role in the interest rate you get. 

What to Know About Down Payments

When it comes to buying a house, saving up for a down payment can be one of the most overwhelming aspects. While down payments are one of the biggest obstacles for many in the mortgage process, it helps to understand the ins and outs of why they play such a big role.

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