Each day we receive many questions about FHA mortgages from prospective homebuyers. Below we have listed a few of the most common FHA Home Loan Q&A. Do you have a question? Contact us at Ph: 800-743-7556 or just submit the quick info request form on this page.
Q: What exactly is an FHA mortgage? T. Robinson – Pensacola, FL
A: The Federal Housing Administration (FHA) is an agency of the federal government. The FHA insures private loans issued for new and existing housing, and for approved programs for home repairs. The FHA was created by Congress in 1934, and in 1965 became part of the Department of Housing and Urban Development’s Office of Housing, also known as HUD. The FHA’s mission in the present day includes offering to help borrowers achieve the dream of homeownership with minimum cash savings. FHA also assists lenders by reducing the risk of issuing loans.
Q: Does FHA offer 100% financing? G. Sweet – Orlando, FL
A: No, the program requires a 3.5% down payment. However, Florida first-time buyers that are employed by a Florida-based business have the HomeTown Heroes Program available. This second mortgage program allows 5% (up to $35,000) for your FHA down payment and closing costs. The program does have household income restrictions, please learn more about the Florida Hometown Heroes mortgage here. The FL Hometown Heroes assistance funds are limited by the state each year, please check with us for the latest updates.
Q: What are the current FHA monthly mortgage insurance ( PMI / MIP) costs? K Collier – Tampa, FL
A: The mortgage insurance costs for FHA mortgages (also known as PMI or MIP) are being reduced from 85% to .55% for max 96.5% financing loans. Please read more on the FHA mortgage insurance here.
Q: I understand the FHA loan requires a 3.5 percent down payment, can I have a family member help with this? L. O’Neill – West Palm Beach, FL
A. Yes, your family can help contribute the needed down payment and/or closing costs funds. However, the “gift funds” must be documented by both the gift donor and the gift recipient. Just be sure to talk to your loan specialist before receiving any large deposits.
Q: Is the FHA program only reserved for first-time homeowners? What if I owned a home in the past? K. Falkner -Atlanta, GA
A: No, anyone can apply for the FHA loan, the program isn’t reserved for only first-time buyers. However, applicants that currently have an FHA mortgage, and want to retain their house, may face additional qualifying challenges for the new loan.
Q: How are the FHA interest rates compared to other loan programs? L. McCall – Sarasota, FL
A: FHA interest rates are actually very low, oftentimes lower than conventional Fannie Mae or conforming loans. As of 2023, FHA mortgage interest rates are still pretty attractive.
Additional FHA Q&A
Q: Isn’t it harder for houses to qualify for an FHA mortgage when compared to a traditional mortgage? P. Stanford – Ocala, FL
A: FHA has eliminated most of the obstacles to a property qualifying or being “compliant” for FHA financing. Generally, if a home is in good enough condition to qualify for a traditional mortgage, it will also qualify for an FHA mortgage.
Q: How do I get pre-approved for an FHA loan, where do I start? W. Duval – Miami, FL
A: Contact us by submitting the short request form on this page, or call 800-743-7556. Also, click to learn about the FHA application and pre approval requirements. Once you do this a loan specialist will contact us to discuss the process in detail. The entire FHA pre-approval process only takes about 15 minutes to complete. You should have basic income and asset information on hand, this includes W2, pay stubs, tax returns, and bank statements.
You should be able to demonstrate employability, job stability, and reliability. This reliability includes holding a steady job for at least two years with no large breaks in employment. Any foreclosures on your record should be at least four years old. The same applies to bankruptcy.
Q: What are the current FHA loan amount limits? G. Winters – Jacksonville, FL
A: The FHA loan limit varies depending on the county in the U.S. FHA loan limits can change based on factors including average area home prices. See the latest 2023 FHA Loan Limits here.
Q: Do FHA lending loan limits ever change? S. Colombo – St. Petersburg, FL
A: Yes, in recent years there has been an increase in the amount of FHA-insured home loan money available to borrowers approved for loans on single-family home mortgages. Since many low-down payment mortgages disappeared years ago, FHA has helped fill the gap.
This increase in availability means more borrowing power for those applying for FHA home loans, and lets more people than ever have the opportunity to own a home. With only a 3.5% down payment and higher single-family home mortgage limits, now may be the best time for you to apply for an FHA home loan.
Take a good look at your finances before you proceed; your monthly housing costs should not take up more than 31% of your gross monthly income. Some people make the mistake of calculating their housing budget using net income, which won’t help you when it comes time to apply for an FHA loan.
Q: What is FHA monthly mortgage insurance or PMI? – A. St. John – Clearwater, FL
A: FHA mortgages are insured to protect lenders in case of a default on the FHA loan. An FHA mortgage is advantageous to the borrower because of the reduced cash investment needed to close on a home. The FHA mortgage (and low down payment) is possible in part because the FHA is funded solely from the income it creates itself via monthly mortgage insurance payments.
Like most government mortgage programs, the FHA is not funded by tax dollars, but from the revenue generated by FHA mortgage insurance. Other home loans have more stringent requirements, but FHA mortgages have flexible payment schedules and more inclusive definitions of monthly income. All of this may be quite confusing to a first-time home buyer. If you aren’t sure why an FHA loan may be right for you, reach out to us by calling 800-743-7556 and let’s talk about the best financing options for you.
Q: What about the one-time upfront FHA mortgage insurance costs – K. Armstrong – West Palm Beach, FL
A: Yes like all other government mortgage programs ( USDA, VA) the FHA loan also requires an upfront, one-time mortgage insurance premium to be paid at closing. The upfront mortgage insurance premium of 1.75% (UFMIP as it’s known) is most often rolled into the new loan. It can also be paid out of pocket by the home buyer, but most just decide to add to their total loan amount. Learn more about FHA mortgage insurance by clicking here.
Q: What are the closing costs associated with FHA mortgages? B. Valentine – Atlanta, GA
A: Except for the addition of an FHA mortgage insurance premium, FHA closing costs are pretty much the same as other government loan programs or conventional loan. The FHA requires a single, upfront mortgage insurance premium equal to 1.75% of the mortgage to be paid at closing or financed into the new loan.
All Government home loans require some sort of upfront mortgage premium. As of 2023-2024, USDA loans require 1%, VA loans require 2.15%, and FHA loans require 1.75%. After closing, you will then be responsible for an annual premium paid monthly. See the FHA loan details page above for more explanation. As for other costs like appraisal, survey, government taxes, title/attorney-related fees, and lender fees – these are pretty much all the same regardless of what type of loan you choose.
Q: Will my monthly taxes and home insurance be included in my monthly mortgage payment with the FHA loan? J. Clay – Nashville, Tennessee
A. Yes, all government home loans (FHA included) will require taxes and home insurance to be escrowed and included with your monthly loan payment. It will also be renewed automatically for you each year.
Q. Can I sell my home and move anytime with an FHA loan? F. Wallace – Memphis, TN
A. Yes, you can sell your home and pay off your loan at any time without penalty.
Q. What if I need to borrow a higher loan amount that is over the allowable FHA loan limits, do I need to apply for a Jumbo loan? – J. Harris – Denver, CO
A. Yes, if your loan amount is over the limit for your county, you would need to look at other options like Jumbo financing. Certain lenders now offer Jumbo loans to 95% financing. Only a 5 percent down payment is needed.
Q: Can I refinance my current FHA loan? – P. Miller – Macon, GA
A: Yes! The FHA does allow refinancing on an FHA loan, but there are some FHA loan requirements. These include FHA guidelines on the reasons for the refinancing – interest rate reduction, cash out, etc. As part of the FHA streamline process lenders are permitted to include the closing costs into the new mortgage, as long as there is enough equity in the property.
Most streamline refinance programs are just that.. “streamline” They don’t require a new appraisal, loan to value can be unlimited and minimum hassles in regards to paperwork. Click here to learn more about the FHA refinance options. FHA interest rates are still very low!
Q: What if interest rates go a lot lower in the future? J. Hernandez – Tampa, FL
A: If interest rates drop significantly, you may want to investigate refinancing. Most experts agree that if you plan to be in your house for at least 24 months and you can get a rate of 2% less than your current one, refinancing is a good idea. But refinancing may also include closing costs again, even though these costs can likely be rolled into the new loan, they are still “costs” that will be added to your loan balance. The benefits must justify the cost.
Q: Where can I find a list of the current FHA loan amount limits? K. Phillips – Vero Beach, FL
A: Please see the latest 2023 FHA loan limits here
FHA Loan Pre-Approval Questions Below:
Q. How long does the FHA pre-approval process take, and what type of paperwork do I need to get started? K. Gilbert – Birmingham, Alabama
A. The loan pre-approval process is typically done over the phone in about 15 min. Applicants will want to have their income pay stubs and bank statements for the past two months. In addition W2 and tax returns for the previous two years. The mortgage company will likely request these items once the FHA loan application is complete. You will also need to answer basic questions like address, asset amounts, birthday, etc.
Q. How long does the FHA loan pre-approval letter last once complete? B. Phillips – Memphis, TN
A. The loan pre-approval typically lasts for three months. If you have not purchased a home in the time frame, the lender will likely want to obtain a new credit report and update any new changes to your application. It generally only takes a few mins to get everything updated and get a new letter of pre-approved issued to you.
Q. I hear different terms like pre-qualification and pre-approval, what is the difference? D. Franks – Nashville, TN
A. The pre-qualification is when the lender obtains a credit report and asked you the questions needed for an application, but WITHOUT actually verifying with supporting documentation. Income, pay stubs, asset statements, etc. They are basically taking “your word” A pre-approval is when they actually verify all these things before issuing a commitment letter.
Q. Should I get my FHA mortgage pre-approval before starting the home search? Or wait until after I make my offer? H. Crow – Valdosta, GA
A. Definitely get pre-approved before starting the home search. Many realtors and home sellers will request/demand this anyway before accepting any offer from you. It’s important you understand in advance your pre-approval amount, monthly expenses, etc.
Q. Does it costs anything to do my FHA loan application and get pre-approved? S. Clay – Miami, FL
A. Some mortgage companies could charge an application fee to apply. But most (like us) typically just charge the costs of a credit report to process your FHA application. Credit report charges are pretty cheap, generally $40 per applicant.
FHA Mortgage Source is a leading FHA loan resource, serving you 7 days a week. Have questions? we want to help. Please call us at Ph: 800-743-7556 or submit the quick Info Request Form on this page.