What is an FHA Loan?

An FHA Loan is a mortgage insured by the Federal Housing Administration. Overseen by the Administration of Housing and Urban Development. Borrowers with FHA loans pay for mortgage insurance, which protects the lender from a loss if the borrower defaults on the loan. FHA loans do not come directly from the FHA, they insure these loans. 


FHA Fun Facts

  • Sellers can contribute up to 6% in closing costs and prepaid expenses
  • Available for 1-4 unit properties
  • The FHA is not the lender, only the insurer to an FHA-approved lender.
  • Need some rehab (nonstructural) done before you move in? There is also an FHA 203k loan. Let us know if you want to learn more.
  • Maximum Loan amount in St. John’s, Duval, and Clay County: $330,050.
  • Occupancy type: Primary Only

FHA Money Facts

  • Credit issues

    • Min. Credit Score: 580
    • Debt to Income Ratio: Typically 43%
    • Gift Funds: Allowed
    • Seller Concessions: Up to 6%
    • Any foreclosure action against you must be 3 years old or more
    • You must have 36 months of good credit after the foreclosure action against you
    • You must have 36 months of stable income
    • Any bankruptcy action taken by you must be 24 months or older
    • You must have a record of paying your bills 24 months after the bankruptcy proceeding

Down Payment

  • min. 3.5% down payment (FICO credit score > 580)
  • min. 10% down payment (FICO credit score 500-579)
  • FICO credit scores < 500 are generally ineligible for FHA loans

Mortgage Insurance Premiums Explained (there are 2 of them) [source: www.portal.hud.gov]

  • First Premium: The Upfront Mortgage Insurance Premium (UFMIP) note: this is a one time premium that can be financed into your loan
    • 1.75% of Base Loan Amount (ex. $100,000 = $1750)
  • Second Premium: Annual Mortgage Insurance Premium (MIP)
    • .85% for down payments less than 5% [ex. $100,000 = $850]
    • .80% for down payments greater 5% [ex. $100,000 = $800]
    • Although this an annual premium, it’s paid monthly with your monthly mortgage payment

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