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Are you looking for an FHA guaranteed home loan? There are many questions about the house buying process, including what the rules are for the types of homes or properties you can purchase with an FHA mortgage.

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FHA Loan Articles

News and Updates for Homeowners

Loans the FHA Will and Won't Approve

April 14, 2014 - Are you looking for an FHA guaranteed home loan? There are many questions about the house buying process, including what the rules are for the types of homes or properties you can purchase with an FHA mortgage.

There are plenty of misconceptions about the FHA single-family home loan program. The loan applicants who are interested in loans for commercial buildings or properties can’t use the FHA single-family loan to do so. These types of FHA home loans are intended for purchasing a dwelling for the borrower’s personal use.

The FHA provides an easy-to-read list of approved and unapproved uses for an FHA mortgage. Once you see the list, it will be clear how FHA single family loans can be used. The rules for approved uses are found in HUD 4155.2, Lender’s Guide To The Single Family Mortgage Loan Process.

According to the Lender’s Guide:

“FHA’s single family programs are limited to one- to four-family properties that are owner-occupied principal residences. FHA insures mortgages secured by
  • detached or semi-detached dwellings
  • manufactured housing
  • townhouses or row houses, or
  • individual units within FHA-approved condominium projects.”
According to the rules in HUD 4155.2, the FHA will not insure mortgages “secured by
  • commercial enterprises
  • boarding houses
  • hotels and motels
  • tourist houses
  • private clubs
  • bed and breakfast establishments, or
  • fraternity and sorority houses”
The residential nature of a property makes the difference in whether an FHA single-family home loan is approved or disapproved. It’s also important to understand that the properties listed in the “approved” column may not always be available for purchase with an FHA loan--lenders at the time of this writing are not offering FHA loans for manufactured housing due to housing market trends. Your experience may vary depending on your location and othe factors.