FHA Mortgage Loans

What Is An FHA Loan?

Commonly known as a "Government Loan or HUD Loan", an FHA loan is guaranteed by the Federal Housing Administration. The Federal Housing Administration, or FHA, provides mortgage insurance on loans made by FHA mortgage lenders throughout the United States. FHA does not make the loan.

FHA is the largest insurer of mortgages in the world, insuring over 34 million properties since it's inception in 1934. FHA’s mission driven organization encourages home ownership and provides affordable housing opportunities with low down payment and flexible credit requirements.

FHA According To Wikipedia:

The Federal Housing Administration (FHA) was created out of the National Housing Act of 1934, and was established to increase home construction, reduce unemployment and insure government loan programs.

FHA loans have historically allowed lower income Americans to borrow money for the purchase of a home that they would not otherwise be able to afford. The program originated during the Great Depression of the 1930s, when the rates of foreclosures and defaults rose sharply, and the program was intended to provide lenders with sufficient insurance.

Some FHA programs were subsidized by the government, but the goal was to make it self-supporting, based on insurance premiums paid by borrowers.

While most people believe that the FHA lends money directly to borrowers, it actually just insures a certain type of loan that is financed by traditional banks and mortgage lenders.  Four of the most visible single family housing programs that FHA offers are, Section 203(b), Section 234(c), Section 203(k) and Home Equity Conversion Mortgages (HECM) – Reverse Mortgages.

FHA Loan Type Highlights:

Section 203(b)

  • largest of FHA’s single family programs
  • 1-4 unit properties are eligible
  • flexible credit requirements
  • 3.5% down payment allowed
  • down payment may be a gift from specific sources

Section 234(c)

  • provides mortgage insurance for individual condominium units
  • credit, down payment and limits of 203(b) apply
  • in 2010, condominium complexes must be approved through HRAP/DELRAP to be eligible for FHA insurance

Section 203(k)

  • primary program for property rehabilitation
  • encourages community and neighborhood revitalization
  • only 1 mortgage loan is used for both the acquisition and the renovation
  • 1-4 unit properties including condominiums are eligible; check with your lender for manufactured housing eligibility
  • required improvements include cost effective energy conservation standards and smoke detectors
  • consultancy may be required

HECM – Reverse Mortgages

  • FHA was the first to promote reverse mortgages nationally
  • allows access to equity in property with flexible terms
  • lump sum, monthly payments, line of credit or a combination available
  • limited to homeowners 62 years of age and older

FHA programs go beyond the scope of the previously listed programs. They offer a Streamline Refinance as well as a Streamline 203(k) for limited repairs. Also, recent legislation has helped FHA offer special programs with incentives to lenders for modifying and refinancing existing mortgages like with the “Making Home Affordable Program.”

When looking for a loan program to fit your specific needs, take a close look at FHA as their programs have become more attractive to both lenders and consumers.

With favorable loan terms, higher loan limits, 30 year fixed repayment terms and flexible down payment options, FHA will continue to encourage home ownership, provide liquidity and stability to the mortgage market.

EEM - Energy Efficient Mortgage Options - Please contact me for me more details about this Special Program


Frequently Asked FHA Questions:

Q. What are the credit requirements for most FHA lenders?

The majority of lenders lean toward a mid credit score of 640 although our company offers loans to FHA borrowers with credit scores between 580 - 600.  However, the underwriting guidelines are tighter on loans with 580-639 Credit Scores.

Q. How much can I afford?

By providing your mortgage professional the required documentation, a detailed analysis will be provided that includes your maximum loan amount

Q. How will I know if the condo/townhome I wan to buy is eligible for FHA financing?

The following link will allow you to enter your zip code for a list of eligible properties:  CLICK HERE




FHA Mortgage Highlights:



Easier to qualify for than a Conventional loan
Higher debt ratios - Lower Credit Score requirements
Fixed Rates Mortgage
Offere Adjustable Mortgage Rate (ARMS)
Less than perfect credit accepted
3.5% Down Payment
Down payment can come from a gift
Competitive interest rates
Seller can pay up to 6% in closing costs
No income limits


FHA $100 Down Mortgage


Borrowers can qualify for a down payment as low as $100. To be eligible for this program you will need to meet the following requirements:

  • Qualify for an FHA loan
  • Locate and obtain an accepted contract on a HUD home 
  • Must use the home as your primary residence.


Special Financing through NC Housing Finance Agency (NCHFA)- NEW HOME ADVANTAGE PROGRAM with Down Payment Assistance (DPA) of 3%  or  5%.  There is also Special DPA up to $8000.   Some Restrictions apply to the DPA Loans.  Please Note:  The Interest Rate will also be higher on loans with DPA than on Regular FHA Loan without assistance. NC Housing also offers the MCC Tax Credit up to $2000/per year.

Many loan programs have changed over the past few years which makes qualifying for a mortgage more difficult.  Please contact me so I can assist you by providing you with a roadmap to make the right financial decision. Call me today for a free consultation.

FHA Maximum Loan Limits Change Each Year - Please contact me to confirm the limit for your area.


FHA Mortgage Information Request

Please complete this form to get more information about the FHA Loan Program. Natalya or someone on her team will get back to you soon.

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