Federal Housing Administration Loans (FHA Loans) are loans that are insured by the Department of Housing and Urban Development (HUD), but are provided by independent lenders, giving borrowers the opportunity to obtain loans with low interest rates and significantly reduced down payments.

Many thousands of families in America have used FHA loans to purchase their first home or subsequent homes. FHA loans are similar to VA loans in respect to credit and income requirements.

The insurance on FHA loans is provided by the government, but the loans are not. Though little or no down payment is necessary, fair credit and sufficient income to repay the loan are requirements. While there is no maximum to the amount of income one may have in order to qualify for a FHA loan, it is important that your monthly housing payments (insurance, principal, interest, etc.) not exceed 29% of your monthly income and also that the loan not exceed the maximum allowed for your particular county. The 29% guideline was strictly enforced in the past but in more recent years, this and other guidelines have become more reasonable.

FHA insured loans are also available to teachers and police officers as a part of HUD's efforts to revitalize low to moderate income neighborhoods. Full-time state certified teachers, whether employed by public school or private, can purchase a home in their district using a FHA insured loan as long as they are in good standing with their employer. Likewise, full-time police officers can purchase HUD Foreclosure home with a fifty percent discount using a FHA insured loan and a $100.00 down payment. These two special programs only apply to homes in designated neighborhoods. You must check your area for available neighborhoods. Your Loan Officer has access to the current list of neighborhoods. The FHA also has a special program for the rehabilitation of existing homes. This program, designated the (203k) rehab loan, allows borrowers to attain an attractive first mortgage with money allowed for upgrading, replacing or repairing items such as

insulation
windows
structural repairs
remodeling of kitchens or bathrooms
exterior siding and doors
repair or replacement of plumbing, heating, air conditioning or electrical systems
repair or installation of wells and septic systems
replacement of carpets, flooring or tiling
energy conservation improvements
major landscape work or site improvement
walkways, driveways and decks

and other items. There are restrictions of course.

Your loan officer will have the most current information and requirements. Please see the Rehab section of this web site for more information on these types of loans.