A mortgage insured by the Federal Housing Administration, designed for 1st time home buyers as it is easier to qualify for.

The Federal Housing Administration (FHA) is a United States government agency created in part by the National Housing Act of 1934. The FHS sets standards for underwriting, construction, and they insure loans made by banks and other private lenders for home building and development. The goals of the FHA is to improve housing standards and conditions, provide an adequate home financing system through insurance of mortgage loans, and to stabilize the mortgage market.

For more detailed information on FHA Loans see below and CLICK HERE


Housing and Urban Development (HUD)

The United States Department of Housing and Urban Development (HUD) is a Cabinet department in the Executive branch of the United States federal government. Although its beginnings were in the House and Home Financing Agency, it was founded as a Cabinet department in 1965, as part of the "Great Society" program of President Lyndon Johnson, to develop and execute policies on housing and metropolises.


Monthly mortgage insurance

An FHA loan is a mortgage insured by the Federal Housing Administration. Borrowers with FHA loans pay for mortgage insurance, which protects the lender from a loss if the borrower defaults on the loan. 


Up Front Mortgage Insurance

The Up Front Mortgage Insurance Premium payments go into an escrow account set up by the U.S. Treasury Department and the funds are used to protect the government in case the borrower defaults on the FHA loan.

How the FHA Process Is Different from a 'Regular' Transaction

Home buyers and homeowners are often surprised to find that FHA appraisal guidelines include detailed instructions for inspecting the property. This is different from a standard appraisal, where the appraiser mainly wants to know what the house is worth. When a Federal Housing Administration home loan is being used, the appraiser basically has to perform double duty.

Here are the primary differences:

  • Conventional: In a typical real estate transaction, where a conventional (non-government-insured) home loan is being used, the appraiser is mostly concerned with the current market value of the property in question. That is his primary objective when visiting the house. He is only concerned with the condition of the property as it relates to the value.

  • FHA: When an FHA loan is being used, the appraiser has two objectives. The Department of Housing and Urban Development (HUD) requires him to determine the current market value, as with any appraisal. But they also require a property inspection to make sure the home meets HUD's minimum standards for health and safety. This is the "double duty" mentioned earlier. It's what makes the FHA appraisal process unique.


General Misconceptions About FHA Financing

Borrowers don’t have money

Poor credit history

“They must be first time home buyers”

Low income


Why Finance With FHA?

Higher debt to income ratios accepted

Lower credit scores will not raise the interest rate unlike conventional financing

Overall lower interest rates than conventional loans

Gifts are allowed

Property Types

Single Family Residence-Attached and Detached

PUD-Attached and Detached

FHA Approved Condo



2-4 Units


Eligible Borrowers

Occupying and non-occupying co-borrower’s qualify


Credit Scores

Majority of lenders will originate loans with credit scores down to 580


Down Payment

FHA requires a minimum of 3.5% down, entire down payment can be gifted funds from a family member. 

See the below chart to see how down payment amount affects monthly mortgage insurance as well as the MIP (mortgage insurance premium).

Mortgage Insurance

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