Questions About FHA Loans

Here are most asked questions about FHA home loans.

Happy family standing in front of their new homeAre you considering an FHA loan to purchase a home? If so, you may have questions about the process and what's involved. Here, you can get answers to your questions about FHA loans and the home buying process.

An FHA loan is a mortgage that's insured by the Federal Housing Administration, so it's a great option for first-time buyers or those with less-than-perfect credit. An FHA loan allows you to borrow up to 96.5% of the home's purchase price, and the down payment can be as low as 3.5%. Plus, the mortgage insurance premiums are lower than with other types of mortgages.

Here, you can learn more about FHA loans and the home buying process, and get answers to your questions about the application process, down payments, and more.

Q. Are condos eligible for a FHA loan?
A. See Condo approval

Q. Are adjustable rate mortgages available with FHA loans?
A. Yes, adjustable rate mortgages are available with FHA loans. The initial interest rate is typically lower than a fixed rate mortgage, but the interest rate can change over time. Read more

Q. Can closing costs be included in a FHA loan?
A. Unfortunately, closing costs cannot be included in an FHA home loan. Thee initial mortgage insurance can be included in the FHA loan amount.

Q. Can an FHA loan be refinanced?
A. Yes, FHA loans can br refinanced. In fact, there are multiple refinance options available, including a no income and no appraisal streamline refinance. See Streamline refinance

Q. Can I buy a multifamily home with a FHA loan?
A. HUD/FHA will finance up to 4 units. One of the units must be occupied by the home buyer. The FHA loan program prohibits investors.

FHA mortgage graphicQ. Can I get an FHA loan on a second home?
A. Technically, you can obtain a second home with an FHA home loan. The FHA loan can not be used to finance a vacation home.
See 2 FHA loans

Q. Can I use unemployment income to qualify for a mortgage?
A. If you're a seasonal worker who receives unemployment benefits on a regular basis during your off-season, an underwriter will probably allow the unemployment income to be included in your mortgage application, provided that you have been receiving the benefits for at least two years.

Q. Can you get an FHA loan with bad credit?
A. This is a question that is often asked. First and foremost, what is the nature of your poor credit? Late payments on credit cards, defaulted government debt, or even a bankruptcy. The FHA loan program allows home buyers with credit scores as low as 500 to purchase a home, although a down payment of ten percent is necessary. The down payment required is 3.5 percent for a credit score of 580. Make an appointment to meet with a loan officer and explain the reason(s) why your credit has become negative.

Q. Do FHA loans require an inspection?
A. No inspection is required for an FHA home loan. The FHA does require an appraisal as a condition for the loan.

Q. Do FHA loans require mortgage insurance?
A. The FHA requires mortgage insurance. There is a premium that is paid in cash at settlement or financed. There is also a monthly insurance premium (MIP).

Q. Does the FHA loan cover closing costs?
A. The FHA does not cover closing costs. The closing costs can be paid by the home seller up to 6% of the sales price (if agreed to), a gift from an eligible donor, or a grant from an eligible non-profit company.

Q. Does the FHA loan have a prepayment penalty?
A. There are no prepayment penalties with FHA mortgages.


Q. Does mortgage insurance cover death
A. The mortgage insurance on an FHA mortgage is not life insurance and does not cover death.

Q. FHA roster of appraisers
A. With this link, ou can find the FHA roster of appraisers

Q. FHA requirements for handrails
A. The FHA no longer mandates the installation of handrails; it is up to the appraiser to determine if railings are necessary to remove a safety concern. Handrails should be built in line with local regulations along open staircases and stairwells.

Q. How do I Buy a FHA Foreclosure?
A. See Buying a HUD home

Q. How do lenders calculate my student loan payments?
A. See FHA Student Loan Guidelines 2022

Q. How do you calculate FHA MIP?
A. See How to Calculate FHA Mip Monthly

Q. How long do Chapter 7 bankruptcies last?
A. For up to ten years, a Chapter 7 bankruptcy will remain on your credit report. Following a Chapter 7 bankruptcy, a waiting period of up to three years may apply, prior to an FHA loan application.
See Bankruptcy Waiting Period

Q. How long will it take to pay off my mortgage if I pay an extra $100 every month?
A. Use our amortization calculator with an extra payment for the answer.

Q. What are closing costs?
A. In addition to the initial deposit, the cost of securing a loan for your house will need you to pay other fees and charges known as mortgage closing costs. These charges are typically between 3 and 5 percent of the total loan amount and may include things like title insurance, legal fees, appraisals, taxes, and other potential expenses. A brief overview of some of the most significant closing expenses is provided below.
See FHA Closing Costs

Q. What are discount points?
A. Discount points are a type of mortgage interest that can be used to buy down the interest rate on a loan. They are paid upfront and can save the borrower money over the life of the loan. Read more

Q. What are the credit rquirements for a FHA loan?
A. See Credit requirements

Q. What are the requirements for a FHA home loan?
A. See FHA Loan Requirements: Everything You Need to Know

Q. What are the FHA interest rates today?
A. See FHA Rates Today

Q. What does FHA stands for?
A.  FHA is an abbreviation for the Federal Housing Administration. The FHA is a division of the Department of Housing and Urban Development (HUD).

Q. What inspections are required with an FHA loan?
A. The FHA leaves any inspections up to the lender. The only requirement is the appraisal. The appraiser may suggest a further examination for one thing or another.
Read more about Inspection Requirements

Q. What is an FHA Amendatory Clause?
A. The FHA amendatory provision essentially says that if the house does not appraise for the sales price, the buyer cannot be forced to proceed with the transaction. Read more

Q. What is earnest money?
A. See Escrow: What Is It and Why You Need It

Q. What is a proof of funds letter?
A. See Proof of Funds When Buying a House

Q. What is mortgage escrow?
A. See Escrow: What Is It and Why You Need It

Q. What is per diem interest?
A. See Per diem interest

Conclusion

In conclusion, the FHA program offers many benefits to potential homeowners. By answering some of the most common questions about the program, we hope that you have a better understanding of how it works and whether or not it is right for you. If you are still unsure, be sure to consult with a qualified mortgage professional.