FHA loans provide excellent benefits to buyers, homeowners, and even sellers. There are so many FHA frequently asked questions that if left unanswered could cause problems during a home purchase or refinance. Therefore, it is key to understand and follow the FHA rules. We have compiled a list of 30 popular FHA FAQ topics. Not only do we answer these questions, but we also share more detailed answers in separate articles for each topic. As you read each FHA question and answer, click on the link to a more detailed article to learn more. Then, reach out to an experienced FHA lender for a discussion.
Most Popular FHA FAQ
- Is FHA just for first time home buyers?
- What are the FHA flipping rules and how does it affect buyers and investors?
- How do I get rid of FHA PMI?
- What are the FHA lead based paint requirements on homes built before 1978?
- How does FHA identity of interest affect buyers?
- Can I have two FHA loans at once?
- Does FHA allow rental income on a departing residence?
- What are the FHA appraisal requirements?
- How do FHA loans treat student loan debt?
- Does a co borrower have to occupy the home for an FHA loan?
- How does an FHA streamline refinance work?
- What are the benefits of refinancing an FHA to a conventional loan?
- What are the FHA seasoning requirements after a bankruptcy?
- Can I get an FHA loan with limited credit or just one credit score?
- What is the current FHA loan limit?
- How does an FHA 203k renovation loan work?
- What is the short sale waiting period for getting an FHA loan?
- What is the foreclosure waiting period for getting an FHA loan?
- Can I pay my own property taxes and insurance on an FHA loan?
- Is it possible to count less than 2 years of commission income on FHA loans?
- How is down payment assistance used with an FHA loan?
- What is the maximum FHA debt ratio allowed?
- How much down payment is required on an FHA loan?
- Do FHA loans allow gift funds for down payment?
- How does an FHA gift of equity work?
- Can I buy a manufactured home with an FHA loan?
- When can I use the HUD $100 down payment loan?
- Does FHA require all collections be paid off?
- How can I lower my FHA loan payment?
- Can the seller pay buyer closing costs when using an FHA loan?
Is FHA Just for First Time Home Buyers?
FHA loans are a very popular tool for buying or refinancing a home. Although many feel it is just for first time home buyers, they are actually available for repeat buyers as well. Therefore, a very popular FHA FAQ deals with this topic.
What are the FHA Flipping Rules?
FHA flipping rules are key for Realtors, sellers, investors, buyers, and mortgage lenders. The reason is that there are FHA restrictions to buying or selling certain home sales within 180 days of the prior transfer. Realtors and investors really need to study this FHA FAQ!
How Do I Get Rid of FHA PMI?
No matter what percentage of the appraised value or purchase price, FHA requires both monthly and up-front financed mortgage insurance premium. Otherwise known as PMI or MIP. Sometimes, there are ways to get rid of FHA PMI. This is one of the most popular FHA FAQ topics.
FHA Lead Based Paint Requirements on Homes Built Before 1978
When buying or refinancing a home built pre-1978, it is common to run into a few FHA rules. The reason is it was popular and lawful for paint to include lead. So, homes with peeling paint are considered a risk and need to be fixed.
How Does FHA Identity of Interest Affect Buyers?
Like all mortgage loans, FHA has a few quirks to it. One such area is the FHA identity of interest rules. This deals with buying a home from a related party such as family, landlord, etc. To learn and avoid the possible pitfalls related to the FHA identity of interest, click here.
Can I Have Two FHA Loans at Once?
The short answer is yes. BUT, there are some rules which have to do with distance and other areas. So, make sure to review this article below to figure if you meet the guidelines. Also, if you do not, there are potentially other options discussed.
What Are the FHA Appraisal Requirements?
Oh, the dreaded FHA appraisal. Actually, it isn’t that bad once you know what the appraiser is looking for and why. For buyers, you want to know if there are issues because it could be expensive to fix in the future.
How Does FHA Treat Student Loan Debt?
Student loan debt can really restrict a household’s budget. Yet, there are many forms of payment offered by student loans today. Sometimes, student loans have deferred payments, income based repayment, or fully amortized payments. Where things get complicated with buying or refinancing a home, is that each home loan treats student loan debt differently. That’s why it is important to read this article below
Does a Co Borrower Have to Occupy the home for an FHA Loan?
On an FHA loan, it is not limited to just one borrower. Although, not only can you have a co borrower. Additionally, FHA allows a non occupying co borrower which can help a buyer qualify better for a home purchase. It is even allowed on a refinance.
How Does an FHA Streamline Refinance Work?
In a low interest rate environment, homeowners with an FHA loan have the advantage of a simple refinance. It is called an FHA streamline refinance and it has a couple options for these homeowners. Of course, the main requirement is that the current mortgage must be an FHA loan. So, if you meet this requirement, check out the full article below that explains this FHA FAQ answer. It explains FHA and other refinance options.
What Are the Benefits of Refinancing an FHA to Conventional Loan?
Maybe refinancing to another FHA loan is not the best option. What if there is sufficient equity and/or credit scores to reduce or remove mortgage insurance? Then, there could be a big advantage of refinancing an FHA loan to a conventional loan. Check out the full details and reasons for doing this below.
What are the FHA Seasoning Requirements After a Bankruptcy?
A common misconception is that after a bankruptcy, buying a home is impossible or waiting 7 years is required. Actually, most of the time this is not the case. Luckily, FHA is very flexible when it comes to buying or refinancing after a bankruptcy.
Can I Get an FHA loan with Limited Credit?
Buying a home does not require perfect credit or an 800 credit score. Especially, when it comes to FHA loans. FHA is very flexible when it comes to a borrower’s credit report and scores. It is even possible to buy a home with good credit, but very limited credit.
What is the Current FHA Loan Limit
One very popular FHA FAQ includes, what is the maximum FHA loan I can get. Like most mortgages, there are limits and FHA is no different. So, it is important to remember a couple of things: There are limits and it varies based on the county which the property is located.
How Does an FHA 203k Renovation Loan Work?
Maybe you know that FHA loans offer a low down payment way to buy a home. Also, as a homeowner FHA provides great terms at a high percentage of the appraised value. But, did you know that it also offers a renovation program? That’s right, the FHA 203k renovation loan allows borrowing above the current value for home improvements. Basically, there are 2 versions which handle renovations from small projects to major work.
What is the FHA Short Sale Waiting Period?
Having a short sale does not mean a buyer can never purchase a home again. Fortunately, FHA loans understand that people have bumps in the road. Once it happens and sufficient time has elapsed, FHA is there to offer an opportunity to buy another home. Plus, it isn’t a 7 year wait!
What is the FHA Waiting Period for a Previous Foreclosure?
Like a short sale, a foreclosure is a derogatory housing event that makes it more difficult to purchase another house. But, FHA has forgiving guidelines when it comes to a previous foreclosure.
Can I Pay My Own Property Taxes & Insurance on an FHA Loan?
Some buyers and homeowners prefer to pay their own taxes and insurance. Paying your own taxes and insurance is called waiving escrows or an escrow waiver. So the answer to this FHA FAQ is no, but check out how you can pay your own taxes and insurance here.
Can I Use an FHA Loan With Less Than 2 Years of Commission Income?
Salary and hourly income is fairly cut and dry to calculate and qualify someone. Yet when it comes to commission income, it is customary for lenders to require an average of 2 years. But, there is an exception for buyers or homeowners to qualify with only 12 months of commission income!
How is Down Payment Assistance Used With An FHA Loan?
This is one of the first FHA FAQ topics. FHA loans require a down payment of at least 3.5% of the purchase price. But, coming up with these funds may be tough sometimes. That is where down payment assistance comes in handy as it can be used to cover down payment and/or closing costs. Basically, down payment assistance helps bridge the gap between the purchase price and first mortgage.
What is the Maximum FHA Debt Ratio?
When it comes time to qualifying for a mortgage, the amount of monthly payments compared to monthly income is key. FHA loans are no different and much of the time it is very lenient when it comes to debt to income ratios.
FHA Down Payment Requirement
FHA loans are a great way to buy a home with low down payment. Plus, the down payment may even be a gift. Although, first time home buyers may use FHA, it is also available for repeat buyers. Plus, if a buyer does not have down payment, read the section above this for down payment assistance options. Finally, there is a $100 down program for FHA foreclosures. So, check out this FHA feature.
Can I Get a Gift For Down Payment on FHA Loans?
One of the glorious features of an FHA purchase loan is that the down payment does not have to come from the borrower. Actually, it is possible for the down payment or closing costs to come in the form of a gift. Although, a gift may only come from certain sources which you can learn in the article below.
How Does an FHA Gift of Equity Work?
Did you know that buying from a family member has advantages? FHA provides a huge advantage of the seller gifting a down payment to the buyer. Basically, it means a possible no money out of pocket by the buyer if there is enough equity in the home. Definitely one of our most popular FHA FAQ topics and tops on Google for the topic.
Can I Use FHA to Buy a Manufactured Home?
Manufactured homes offer affordable home prices to low to middle income buyers. But, not all mortgage loans allow manufactured homes to be used as collateral. Fortunately, FHA loans may be used to purchase a manufactured home. That means purchasing a manufactured home may be accomplished with a low 3.5% down payment too
How Do I Use a HUD $100 Down Loan?
FHA offers a little known, special program for it FHA / HUD owned foreclosure homes. It is called the HUD $100 down program. Not only does this FHA loan just require $100 down payment, but it also allows for FHA required repairs to be financed. Are you looking at FHA foreclosure homes? You need to read about this program!
Does FHA Require Collections to be Paid off?
Things happen and sometimes that means collections or charged off accounts reporting on credit reports. While many home loan programs require collections to be paid off, FHA is pretty lenient when it comes to collections. Especially medical collections! This is actually one of the most popular FHA FAQ s. There are exceptions which allow a certain kind and level of collections to be left open.
How Can I Lower My FHA Loan Payment?
Believe it or not, interest rate is not the only way to lower a home loan payment. Really, there are several other factors that could actually make a much bigger difference in the monthly payment. If considering an FHA loan to buy or refinance a home, you need to understand these key pieces of a home payment.
Can the Seller Pay Closing Costs When Using an FHA Loan?
Even though a buyer may have the 3.5% down payment, there’s more to being to closing. That is called closing costs such as appraisal, lender fees, attorney, title insurance, homeowners insurance, escrow setup, and more. These are all buyer responsibilities, but there is a strategy which allows the seller to pay these costs in the purchase price. Basically, it is a way to finance most of the costs which limits cash to close for a buyer.
More FHA Questions?
Call a loan officer now. Remember that there are other loan types as well that could be something to compare with FHA. Check out other articles on this site or contact a loan officer.