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The most popular FHA home loan is the fixed-rate loan known as the 203(b). It often works well for first time home buyers. It allows individuals to finance up to 96.5% of their home loan and helps to keep down payments and closing costs.

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FHA.com is a privately owned website, is not a government agency, and does not make loans.

Fixed Rate FHA Loans

The Popular 203(b) Federally Guaranteed Mortgage

Get the Full Story About FHA Loans

Home ownership rates in America continue to increase at a steady rate due in a large part to the implementation of FHA home loans insurance program. Over the years, FHA has helped Americans gain the financial independence that comes with owning a home. By creating jobs and reasonable mortgage rates for the middle class, financing military housing, and producing housing for the low income and the elderly, FHA has helped Americans become some of the best housed people in the world with over 74.5 million Americans currently owning their own homes. FHA has insured more than 40 million home loans since 1934.

HOW IT WORKS

By serving as an umbrella under which lenders have the confidence to extend loans to those who may not meet conventional loan requirements, FHA's mortgage insurance allows individuals to qualify who may have been previously denied for a home loan by conventional underwriting guidelines.

FHA loans benefit those who would like to purchase a home but haven't been able to put money away for the purchase, like recent college graduates, newlyweds, or people who are still trying to complete their education. It also allows individuals to qualify for a FHA loan whose credit has been marred by bankruptcy or foreclosure.

NUTS AND BOLTS

The most popular FHA home loan is the 203(b). This fixed-rate loan often works well for first time home buyers because it allows individuals to finance up to 96.5 percent of their home loan which helps to keep down payments and closing costs at a minimum. The 203(b) home loan is also the only loan in which 100 percent of the closing costs can be a gift from a relative, non-profit, or government agency.

Insurance on FHA mortgages are often rolled into the total monthly payment at 0.55 percent of the total loan amount which is roughly half of the price of mortgage insurance on a conventional loan. FHA will collect the annual MIP, which is the time on which you will pay for FHA Mortgage Insurance Premiums on your FHA loan. Cancellation of the premiums are as follows:

  • No more than 15 year term
    Loan to value at closing up to 90%
    11 year termination
  • No more than 15 year term
    Loan to value at closing greater than 90%
    No cancellation until loan paid off
  • Greater than 15 year term
    Loan to value at closing up to 90%
    11 year termination
  • Greater than 15 year term
    Loan to value at closing greater than 90%
    No cancellation until loan paid off

GUIDELINES

It is not necessary to meet a minimum income requirement in order to qualify for a FHA loan but debt ratios specific to the state in which the home will be purchased have been put into place to prevent borrowers from getting into a home they cannot afford. This is done through a close analysis of income and monthly expenses.

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FHA Loan Articles and Mortgage News

Do You Need Down Payment Help for Your FHA Loan?

May 26, 2020 - If you want to apply for an FHA mortgage, one of the first things you will learn is that FHA borrowers make a minimum 3.5% down payment, unless required to pay more due to low credit scores. How should you approach the down payment issue?

COVID-19 Update: Mortgage Forbearance for Struggling Borrowers

May 16, 2020 - Are you struggling to pay your mortgage during COVID-19? Those who need it can apply for mortgage forbearance, but you should understand the choices open to you--not just for the forbearance period itself, but also for repaying the money you don’t pay during the forbearance period.

COVID-19 Update: Foreclosure Prevention Q&A

May 11, 2020 - Participating lenders are required to offer you COVID-19 mortgage payment relief options but your lender must determine that you are eligible. Call your lender or loan servicer to discuss the possibility of being approved for a coronavirus repayment option.

FHA Appraisal Rules You Need to Know

May 9, 2020 - FHA mortgages have specific requirements the property must meet (or be repaired or renovated to meet) FHA appraisal standards and local building code requirements. The rules for FHA appraisals is found in HUD 4000.1, the FHA Single-Family Loan Handbook.

COVID-19 Update: Did FHA Raise FICO Score Requirements for Home Loans?

May 6, 2020 - You may read news stories about higher credit requirements making it tougher to qualify for a mortgage in the era of coronavirus. These stories may be accurate in their reporting of higher FICO score requirements at the time of this writing, but who is responsible for those requirements?