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FHA Loan

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

NOTE: THE MORTGAGE INSURANCE PREMIUM WILL REMAIN THROUGH THE LIFETIME OF THE LOAN

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