Five FHA Loan Tips for the New Year

January 1, 2021

For many, 2021 is the year to buy a home. Whether you’re looking at a starter home or you want to build a house on your own lot to retire in, there are many options with FHA mortgages and not all of them involve purchasing someone else’s suburban house; you can choose from condo units, mobile homes, and more.

5. FHA Loan Limits: Raised for 2021

What is the loan limit in your chosen housing market? FHA loan limits go up again for the majority of housing markets in the USA again in 2021 and while not every single county is affected by higher limits, a large number are.

And there’s the added bonus that FHA loan limits are higher for multi-unit properties--don’t forget to double check the limits for homes that have more than one living unit! You never know....

4. FHA Home Loans Are for All Financially Qualified Applicants

Some people confuse the FHA mortgage loan program with USDA home loans to buy or build, and as a result mistakenly assume that an FHA home loan is a need-based loan. You cannot earn “too much money” to qualify for an FHA loan!

FHA mortgages feature no need-based restriction on FHA loans such as household income caps or other restrictions. FHA mortgages are for any financially qualified borrower and are not intended for a certain segment of the population, a certain income range, and FHA loans are not for first-time buyers only.

3. Condo Units, Mobile Homes, and Multi-Unit Properties

As mentioned above, FHA borrowers may purchase condo units, mobile homes and even multi-unit homes with an FHA mortgage with the same low downpayment terms and guidelines as for existing construction suburban homes. You do not have to make a bigger down payment simply because you choose a condo unit or a multi-unit home.

2. Credit Terms

FHA loans are typically for 15-year and 30-year loan terms. Lender standards will apply, but FHA loan program minimums start at 580 and higher FICO scores for maximum financing of 3.5% down. It is likely your lender may have higher FICO score requirements but these are often around 620 or better to start.

 Borrowers who want to explore their FHA loan One-Time Close construction loan options should expect to be held to a higher credit score standard, but these will be lender requirements and not variations in FHA loan minimums.

1. Down Payment Assistance 

In most cases an FHA mortgage may technically permit down payment assistance, but this assistance must meet FHA guidelines and be properly documented. Down payment help in the form of a down payment grant can come from a family member, friend, employer, or even a local agency but never from the lender or the seller.

For those interested in applying for One-Time Close construction loans, you may find your lender does not permit down payment assistance, but this is NOT an FHA guideline but a lender rule.

 FHA, VA, and USDA: One-Time Close Loans

Want More Information About One-Time Close Loans?

We have done extensive research on the FHA (Federal Housing Administration), the VA (Department of Veterans Affairs) and the USDA (United States Department of Agriculture) One-Time Close Construction loan programs. We have spoken directly to licensed lenders that originate these residential loan types in most states and each company has supplied us the guidelines for their products. We can connect you with mortgage loan officers who work for lenders that know the product well and have consistently provided quality service. If you are interested in being contacted by a licensed lender in your area, please send responses to the questions below. All information is treated confidentially.
 
FHA.com provides information and connects consumers to qualified One-Time Close lenders in an effort to raise awareness about this loan product and to help consumers receive higher quality service. We are not paid for endorsing or recommending the lenders or loan originators and do not otherwise benefit from doing so. Consumers should shop for mortgage services and compare their options before agreeing to proceed.
 
Please note that investor guidelines for the FHA, VA, and USDA One-Time Close Construction Program only allows for single family dwellings (1 unit) – and NOT for multi-family units (no duplexes, triplexes or fourplexes). In addition, the following homes/building styles are not allowed under these programs:  Kit Homes, Barndominiums, Log Cabin Homes, Shipping Container Homes, Stilt Homes, Solar (only) or Wind Powered (only) Homes.
 
Your email to [email protected] authorizes FHA.com to share your personal information with a mortgage lender licensed in your area to contact you.

1. Send your first and last name, e-mail address, and contact telephone number.
2. Tell us the city and state of the proposed property.
3. Tell us your and/or the Co-borrower’s credit profile: Excellent – (680+), Good - (640-679), Fair – (620-639) or Poor- (Below 620). 620 is the minimum qualifying credit score for this product.
4. Are you or your spouse (Co-borrower) eligible veterans? If either of you are eligible veterans, down payments as low as $0 may be available up to the maximum amount your debt-to-income ratio per VA will allow – there are no maximum loan amounts as per VA guidelines.  Most lenders will go up to $750,000 and review higher loan amounts on a case by case basis.   If not, the FHA down payment is 3.5% up to the maximum FHA lending limit for your county.