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FHA Lending Guidelines                                                                                                                        

FHA lending guidelines reflect the Federal Government's commitment to expanding homeownership and home buying opportunities through reduced down payment requirements and relaxed FHA lending guidelines when compared to conventional lending guidelines. I am including the FHA Lending Guidelines here. Email with questions on FHA Lending Guidelines

FHA has recognized man areas as a high housing cost area and has increased the maximum mortgage amount to $362,790 increasing the number of homes which qualify for an FHA lending.  The limits are:

High cost area

  • One Family        $362,790
  • Two Family        $464,449
  • Three Family     $561,411   
  • Four Family       $675,000

The FHA lending program is an outstanding choice for first time homebuyers because FHA lending guidelines require only 3% cash (which may be a gift) into the transaction and the FHA Lending guidelines are 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 lending 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 lending programs to purchase a home. If your interest is in refinancing an existing FHA or VA lending 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 lending guidelines require any outstanding collection accounts, judgments, charge off's be paid in full before closing. If you have had some credit difficulties in the past, FHA compensating factors can often get your lending 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 guidelines
  • 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
  • Seller allowed to pay prepaid expenses
  • Seller can contribute up to 6% of purchase price toward closing cost and discount points
  • 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 "streamline" refinance process which you should consider. One of the important features of the program is that the lending 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.


An adjustable rate mortgage is available 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.

Streamline Refinance

Streamline refinances on insured mortgages have been permitted since the early 1980's. The basic requirements of a streamline refinance are:
  • The mortgage to be refinanced must already be insured.
  • The mortgage to be refinanced should be current.
  • The refinance is to result in a lowering of the monthly 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.

Read more about FHA Loans Closing Costs

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

I have included a page on FHA loans documentation guidelines.

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

Learn more about improving your credit scores

I have an article "Buying your home in 2008" by email explaining negotiating strategy in today's market.

As a Certified Mortgage Planning Specialist, I offer an analysis of your situation today can make suggestions on how small changes in how your consumer and mortgage debt is structured today can have a life changing effect in the years to come.  Read more about this free, no obligation service.

FHA Lending GuidelinesPrequalify for your FHA Loan. 

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