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FHA Home Loans Frequently Asked Questions

by Hector Zapata PA 11/04/2019

If you’ve been considering taking the next step toward homeownership, you’ve likely heard about FHA loans. Offered by the Federal Housing Administration (hence, “FHA”), these loans are great for a number of people hoping to purchase a home but who don’t have a large down payment saved.

There are many misconceptions about FHA loans since they’re often advertised by large, private mortgage lenders but are technically a government program. In order to clear up some of the confusion, we’ve provided answers to some frequently asked questions regarding FHA loans.

Read on to learn about FHA loans and how they might help you purchase a home.

Who issues an FHA loan?

FHA loans aren’t issued by the government. Rather, they’re issued by private lenders but insured, or “guaranteed,” by the government.

Since lenders want to make sure they’ll see a positive return from lending to you, they typically want you to have a high credit score and a large down payment (typically 20%). However, not everyone is able to meet those requirements. In this situation, the FHA is able to help you acquire a loan by giving your lender a guarantee.

Are there different types of FHA loans?

Yes. In fact, there are nine distinct types of loans guaranteed by the FHA. These include fixed rate mortgages, adjustable rate mortgages, refinance loans, reverse mortgages, VA loans, and more.

What do you need to qualify for an FHA loan?

It’s a common misconception that you need to be a first-time buyer to qualify for an FHA loan. However, if you have previously owned a home that was foreclosed on or if you’ve filed for bankruptcy, the foreclosure and bankruptcy have to be at least three years old.

You’ll also need to demonstrate a stable employment history, usually including two years of employment with the same employer.

Finally, the FHA will ask you for your current and previous addresses, the last two years tax returns, and the W-2 forms from any of your recent jobs.

What is the most I can borrow with an FHA loan?

The FHA sets mortgage limits on loans depending on the state and county you’ll be living in. For a single-family home, the limit ranges from $275,000 to $451,000. So be sure to check the limits for your state and county.

Can you refinance an FHA loan?

Refinancing a loan is a great way to receive a lower interest rate or to shorten the term of their mortgage to save in the total number of interest payments. In fact, the FHA typically only allows refinancing when it will result in lower interest payments on a loan.

What is the minimum credit score needed to qualify for an FHA loan?

While you don’t need excellent credit to qualify for a loan, the FHA will require you to have a score of at least a 580. You can check your score for free online from a number of companies, such as Mint or Credit Karma. Be aware, however, that scores vary between credit bureaus. So, it’s a good idea to check your FICO score once per year, which is the score used by mortgage lenders.

About the Author
Author

Hector Zapata PA

Hector was born in Colombia, and has called South Florida home for more than 18 years. He is an Industrial Engineer by trade specialized in Cost Control, Production Planning, and Plant Design. Prior to moving to South Florida, Hector worked for 13 years as a Plant and General Manager in the Graphics and Publishing Industries in Bogota, Colombia. When Hector moved to the United States in 2001, he decided to become a PGA Golf Pro, and created his own business in the Golf Industry as a competitive player, and teaching pro. He was the founder and director of Bonaventure Golf Academy. In his nearly 15 years of experience as a Golf professional and Instructor in South Florida, he has been asked by many customers looking to purchase a home on a golf course his opinion about the best Golf Communities in South Florida. He became a full time realtor in order to better serve his customers, and help them as well as all golf enthusiasts find the home of their dreams. Hector is highly recognized for his personalized service, ethics and professionalism in the Golf industry, and his goal is to provide extraordinary service to his Real Estate customers and friends too! Hector is specializing in Golf communities and Luxury properties in South Florida.

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