FHA Rules to Keep in Mind

There are several things to keep in my in regards to FHA rules. The FHA exists to help borrowers get lending for home purchases. It also helps lenders by reducing certain risks in lending to borrowers. Understanding some simple FHA rules can help with finding the right loan.

  • FHA is not a lender. It simply insures the loan provided by a bank or mortgage institution. The FHA will guarantee a loan which, in turn, reduces the risk to the lender.
  • Pre-qualification is necessary. To pre-qualify for a FHA loan, borrowers must prove job stability or at a minimum employability. Job history with the same company for two or more years is preferred.
  • FHA loan limits vary. Limits are based on the local area's average home prices.
  • FHA loan options vary depending on the dwelling being purchased. Home mortgages can be provided for 1 to 4 units and there is special energy efficiency and 203 programs that help modernize older homes.
  • There are fees charged to all loans that are added to the purchase price. These fees include preparation fees, appraisals, closing costs, inspections, credit reports, etc. The fees may affect the loan's payment and loan terms.

These are just a few FHA rules to keep in mind. Other things to consider are past or present credit problems, down payment amounts and insurance.

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