The FHA loan program lets you purchase a home with a low down payment and flexible guidelines. FHA refinance mortgages are a great option for those who want to lower their monthly mortgage payment or consolidate their bills. See how we make the American dream a reality. Whether you're a first-time homebuyer moving to a new home, or want to refinance your existing conventional loan to an FHA mortgage, there's an FHA program suited to your needs.
With no income limits or credit scoring, many people who can afford the monthly mortgage payments and have reasonable credit will qualify for an FHA mortgage. When it comes to shopping for a home loan, there are a number of options to consider. The remainder is paid off in separate installments, usually with interest, as part of a loan.
With no income limits or credit scoring, many people who can afford the monthly mortgage payments and have reasonable credit will qualify for an FHA mortgage. When it comes to shopping for a home loan, there are a number of options to consider. The remainder is paid off in separate installments, usually with interest, as part of a loan.
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What Is an FHA Loan
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If you've been in the market for a new home and have been shopping for mortgages, you've likely heard of FHA loans. You've probably also heard of the much lower down payment requirements and the low interest rates that are key selling points for FHA-backed mortgages. If you are considering going down the route of an FHA mortgage, it's important you understand exactly how it works.
FHA Loan Limits
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Every year, the FHA establishes loan limits that vary based on county. According to the 2021 FHA Lending Limits, the maximum amount you can borrow for single-family homes ranges from $356,362 to $822,375. The limits may also change based on the type of property you are looking to buy. For instance, the FHA has limits for Harris County set at $356,362 for a single-family home, $456,275 for a duplex, and $551,500 for a tri-plex.
Credit Requirements
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One of the main things many first-time homebuyers worry about then shopping for a mortgage, is whether their credit score is high enough. It's a source of stress for Americans looking to get a loan. Your credit score impacts the type of mortgage you'll qualify for, what interest rate you get. When it comes to the FHA, it also determines how big of a down payment you'll have to make.
Mortgage Insurance
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FHA loans allow you to finance up to 96.5% of the purchase price of your new home. That makes it an attractive option for many homebuyers, but also puts FHA-approved lenders at risk to lose a lot of money in the instance that a borrower defaults on their loan. To help protect lenders from this possibility and continue offering high-risk borrowers such flexible loans, the FHA mandates a Mortgage Insurance Premium (MIP).
Debt-to-Income Ratio
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If FHA borrowers start to default on their homes, it defeats the main purpose of the FHA. That's why there are certain criteria in place to ensure that homebuyers are not signing up for home loans that they cannot reasonably afford and pay back. Since the FHA has no minimum income requirement, it relies on the borrowers' debt-to-income ratio to determine whether they have the means to make monthly payments.
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