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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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May 24, 2018
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The Path to Homeownership
FHA.com is a private company, 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

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FHA, VA, and USDA Construction Loan Options

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Is the FHA One-Time Close Construction Loan Right for You?

April 14, 2018 - FHA One-Time Close construction loans are designed for those who want to have a home built for them from the ground up. Construction loan mortgages, especially FHA One-Time Close loans, are unique among mortgage lending products and have some distinct advantages.

FHA Loan Eligibility Tips for 2018

April 11, 2018 - The timing of your FHA loan application and when you submit it are among the most popular FHA loan eligibility tips. What do you need to know about successfully applying for an FHA home loan? Here are some of the basics.

Gaps In Employment and Reductions In Income

April 5, 2018 - FHA loan rules in HUD 4000.1 address situations where a loan applicant may have a short employment history, frequent changes in employers, and gaps in employment. They also instruct the lender how to proceed when a borrower has a temporary reduction in income.

FHA.com Reviews

FHA.com is a one-stop resource for homebuyers who want to make the best decisions when it comes to their mortgage. With our detailed, mobile-friendly site, individuals can access information about different FHA products, the latest loan limits, and numerous other resources to make their homebuying experience easier. Take a look at some of the reviews from other FHA.com visitors!