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FHA Loans                                                                                                                        

FHA loans reflect the Federal Government's commitment to expanding homeownership and home buying opportunities through reduced down payment requirements, mortgage insurance charges, and relaxed underwriting standards when compared to conventional mortgage loans. 

FHA has recognized Washington DC and other areas as a high housing cost area and has increased the maximum one family home mortgage amount to $234,650 increasing the number of homes which qualify for FHA insured financing. Nationally, the limits are as follows:

High cost area

  • One Family        $239,250
  • Two Family        $306,196
  • Three Family     $370,098   
  • Four Family       $459,969

The FHA loan program is the easiest way to get a home loan because the program requires only 3% cash (which may be a gift) into the transaction and is significantly more forgiving of past credit issues. We will look specifically at the last two years of your credit history. If there are some credit problems, we may be able to overcome them with sufficient explanations and supporting documents of why the issues occurred. Never rule yourself out of qualifying for FHA loan because of credit, prequalify and have me review your credit. I have more information on FHA credit requirements available

This page is focused on the using FHA programs to purchase a home. If your interest is in refinancing an existing FHA or VA loan please go to my refinance center. For extensive information on the FHA 203(k) program to remodel a home please see my renovation loans page.

There are some credit issues that we must allow for a certain time to pass before you can qualify for a FHA loan. They are follows:

  • Two years from the date of discharge for a bankruptcy
  • Three years from the date of foreclosure

FHA requires any outstanding collection accounts, judgments, charge off's be paid in full before closing. If you have had some credit difficulties in the past, compensating factors can often get your loan approved.


  • Lower required down payment
  • FHA loans are assumable* with a qualified borrower
  • Higher qualifying ratios of 29% for housing and 41% for total indebtedness on existing construction; 31% for housing and 43% for total indebtedness on new construction
  • More flexible underwriting standards
  • Gift funds for down payment and closing costs are allowed
  • Up-front Mortgage Insurance Premium can be financed
  • Less cash out of pocket required
  • The lowest down payment (as low as 3%, never more than 5%) requirement of any non-subsidized financing program
  • Non-occupant co-borrowers are allowed for qualifying purposes
  • Seller allowed to pay prepaid expenses
  • Seller can contribute up to 6% of purchase price toward closing cost and discount points
  • Charges on conventional loans such as tax service fees, underwriting fees, copy & courier fees are not allowed to be charged to the buyer with FHA loans
  • With FHA’s no cost streamlined refinancing you can lower your payment at NO COST to you. Usually, closings can occur within 2-3 weeks.
  • Rehab your house with only one loan using the FHA 203K program
  • The FHA ARM has the best features on the market with a 1% annual interest rate cap and a 5% lifetime cap.


If you currently have an FHA loan and are considering refinancing to lower your monthly housing cost there is a simple low cost " FHA streamline" refinance process which you should consider. One of the important features of the FHA program is that the loan is assumable should you sell in the future. If interest rates rise, an assumable mortgage may be the difference between being able to sell your home or not.

Other FHA Loan Programs

Teacher Next Door

The teacher next door is a program offering up to a 50% discount from the HUD asking price to teachers living in the community where they work.

Officer Next Door

The officer next door is a program offering up to a 50% discount from the HUD asking price to police officers living in the community where they work.

FHA 203(k)

The FHA 203(k) allows homeowners and homebuyers an opportunity to purchase or refinance existing housing and finance up to 110% of the costs needed to improve the home. The 203(k) is ideal for "fixer-uppers" or "handyman specials". The 203(k), a pioneer in this type of financing, was known as a horrendous web of paperwork and long delays. However, in 1994 HUD recognized the need to assist the aging housing stock and restructured the 203(k) program and is now one of the fastest growing programs in the country. 


FHA offers an adjustable rate mortgage which allows many people to buy a home with very low payments and down payment requirements. Useful if you have a debt to income issue or just want to buy more home.

HUD Homes

What is a HUD home? When someone with a FHA (HUD) insured mortgage can't meet the payments, the lender forecloses on the home. FHA then pays the lender what is owed; and HUD takes ownership of the home. Then they sell it at market value as quickly as possible. HUD uses an outside service to sell the homes via a auction format. You must use a Realtor® to purchase a HUD of home. For additional information on buying repossessed homes located on the foreclosure page. For  search information on  foreclosed homes . They offer listings of properties for sale.

Streamline Refinance

FHA has permitted streamline refinances on insured mortgages since the early 1980's. The basic requirements of a streamline refinance are:
  • The mortgage to be refinanced must already be FHA insured.
  • The mortgage to be refinanced should be current (not delinquent).
  • The refinance is to result in a lowering of the borrower's monthly principal and interest payments.
  • No cash may be taken out on mortgages refinanced using the streamline refinance process.

For more information go to the FHA Streamline Refinance page. I also have a Free report "Buying your First Home" available by email.

I have included a page on how to calculate your qualification ratios.

I have included a page on documentation requirements.

Be sure to visit the Mortgage Library.    I also have a report "Buying your First Home" available by email.

Prequalify for your Easy Home Loan. 




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