FHA Home Loans

An FHA purchase loan is a low down payment government loan program offered by HUD - Housing and Urban Development. The minimum down payment required is 3.50% of the sales price. You can only purchase a 1 to 4 unit home you intend to live in and take possession of within a 60 days from closing. FHA loans are also available for refinance loans.

If you are purchasing a rural home, check out our USDA zero down rural housing loans. These loans are designed for moderate income families and have income limits.

Veterans and active duty military personnel should consider using a VA loan. No down payment is required on loan amounts up to $417,000.

2014 FHA Loan Limits for Texas
Property Type Floor * Houston
Area
Austin
Area
San Antonio
Area
DFW
Area
1 Unit $271,050 $295,550 $305,900 $316,250 $287,500
2 Unit $347,000 $348,900 $369,650 $425,650 $347,000
3 Unit $419,425 $421,750 $446,800 $514,500 $419,425
4 Unit $521,250 $524,150 $555,300 $639,400 $521,250
* Floor is the maximum loan amount allowed in most counties in Texas.  

Guidelines

FHA Guidelines Summary
Purpose Occupy Units Max. LTV/
CLTV
Max. Loan
Amount (1)
Purchase Primary 1-4 96.50% $271,050 (1)
Streamline(2)
Refinance an existing FHA Loan
Primary
1 97.75% $271,050 (1)
2nd Home
Investment
1-4 97.75% $271,050 (1)
Rate & Term Refinance Primary 1-4 97.75% $271,050 (1)
Cash-Out Refinance Primary 1 see Home Equity Loans

 

  • Assumable - Yes, but the new borrower must qualify for the loan to assume it.
  • Bankruptcy or Foreclosure

    Chapter 7
    You must wait 2 years from the discharge date.

    Chapter 13
    You must have made all your payments on time for at least 12 months. Permission from the bankruptcy trustee is also required.

    Foreclosure
    You must wait 3 years from the date of the foreclosure.

    NOTE: After a bankruptcy be sure to check  your credit report for errors  and correct inaccurate information. This can make a big difference in your credit scores and loan approval.

  • Buy-downs - Allowed on 30 year fixed rate purchase loans. Not allowed on ARM loans.
  • Cash Reserves - No reserves required on 1 - 2 unit homes. Borrower(s) must have three months' mortgage payments in reserve after closing on 3 - 4 unit homes.
  • Closing costs - The borrower may pay all closing costs except the tax service fee. The seller can pay up to 6% of the sales price towards your closing costs.
  • Collections - Effective April 30th, 2012 - Credit reports with Collection accounts will require further review unless the credit risk class is "Approve/Eligible". If further review is required the following will apply:
    • When collections are present, the borrower must provide a written explanation for all collections.
    • FHA does not require collections to be paid off as a condition of mortgage approval.

    NOTE: If collections are revealed, but not on the credit report, the loan must be downgraded for further review.

  • Credit Scores - The minimum middle credit score for Streamline Refinance loans is 700. For all other FHA loans the minimum middle credit score allowed is 640.  If your scores are below 640 you will need credit repair to see if your scores can be raised enough to qualify.
  • Disputed Credit Accounts - Effective April 30th, 2012 - Credit reports with Disputed Credit accounts will require further review unless the credit risk class is "Approve/Eligible" and any of the following circumstances apply:
    • The disputed account has a zero balance, or
    • The disputed account is marked as "paid in full" or "resolved", or
    • The disputed account is both less than $500 and more than 24 months old.

    NOTE: If there are multiple disputed tradelines, each must meet the above requirements or the loan must be downgraded for further review.

  • Qualifying Ratios - Two ratios are considered for qualifying. Your total housing payment vs. your gross income and your total monthly debt payments(including the house payment) vs. your gross income. Qualifying ratios are limited to 31/43% and 33/45% for EEMs (Energy Efficiency Mortgages). Higher ratios are allowed with acceptable compensating factors.
  • Eligible Property Types - 1-4 unit homes, townhouse, HUD approved Condos and PUDs.
  • Energy Efficiency Improvements - EEMs are available on FHA loans..
  • Gifts and DPAs - Acceptable gifts and down payment assistance programs are allowed to be used for the required down payment.
  • Judgments - FHA continues to require court-ordered judgments to be paid off before the mortgage loan is eligible for FHA insurance.*

    * Exception: An exception to the payoff of a court-ordered judgment may be made if the borrower has an agreement with the creditor to make regular and timely payments, and provides documentation indicating that a minimum of three months payments have been made according to the agreement. The monthly payment must be included in the borrower’s debt-to-income ratio.
  • Loan to value - up to 96.5% for purchase loans and up to 97.75% for refinance loans.
  • Loan Types - 15, 20, 25 & 30 year fixed rate loan. 3/1 & 5/1 FHA ARM loans are available with 1/5 caps and 1.75 margin.
  • Maximum Loan Amount - Based on the county your property is located in. Most counties are at the base maximum loan amount, which is $271,050. The San Antonio area is $332,500, the Austin area is $305,900, the Houston area is $295,550 and Dallas-Fort Worth area is $287,500.
    Look up Maximum FHA Loan Limits
  • Mortgage Insurance - FHA loans require both annual an MIP and an upfront MIP.
    • Annual MIP - The annual mortgage insurance premium is included in your monthly payment. See the following table.
      Annual MIP *
      Terms > 15 years Term =< 15 years
      LTV Annual Rate LTV Annual Rate
      <= 95% 1.30% <= 78% 0.45%
      > 95% 1.35% > 78% <= 90% 0.45%
      -------- ------------- > 90% 0.70%
    • Up-Front MIP - The UFMIP for FHA loans is currently 1.75% for all FHA loan types, except Streamline Refinance loans refinancing an FHA loan that was endorse/insured on or before May 31st, 2009 *. The UFMIP can be financed in your new loan amount, up to the maximum FHA loan limits.

      *For Streamline Refinance transactions being used to refinance an FHA loan when the existing loan was originally endorsed/insured* by FHA on or before May 31, 2009:
      • The annual MIP, regardless of the base loan amount, will be 0.55%
      • The Upfront MIP (UFMIP) , regardless of the base loan amount, will decrease to 0.01%
      (Usually, an FHA loan is endorsed/insured within three months of the original loan closing)
  • Occupancy - You MUST occupy the home you intend to buy within 60 days. NO investment properties or second homes.
  • Reserves - No reserves required on 1 - 2 unit properties. Three months reserves are required for 3 to 4 unit properties.
  • Residency - 1-4 family primary residences only. Second home and investment properties only allowed on streamline refinance loans, with restrictions.
  • Self-Employed - P&L and Balance Sheet required if more than a calendar quarter has elapsed since date of most recent calendar or fiscal-year end tax return was filed by the borrower – with no exceptions.

    Additionally, if income used to qualify exceeds the two year average of tax returns, an audited P&L or signed quarterly tax returns obtained from IRS are required.

    Annual earnings that are stable or increasing are acceptable, while businesses that show a significant decline in income over the analysis period are not acceptable, even if the current income and debt ratios meet FHA guidelines.
  • Seller Concessions - Closing costs cannot be financed in the new loan amount. They can be paid by the seller. The seller can pay up to 6% of the sales price towards your closing costs.
Note:
Guidelines subject to change without notice. Additional guidelines and restrictions may apply. Submit your loan application for approval.
FHA Purchase Loan Rates
Rates based on $200,000 Loans
30 Year Fixed Loans
30 day lock.
15 Year Fixed Loans
30 day lock.
Rate Points APR Rate Points APR
3.750% 0.125% 5.085% 3.125% 0.862% 4.457%
4.000% -1.125% 5.373% 3.375% -1.000% 4.696%
4.250% -3.000% 5.415% 3.625% -1.875% 4.936%
Notes:
Minimum 3.5% down payment req'd.
Refinance Loan Rates - Request analysis and estimate.
FHA 3/1 ARM & 5/1 ARM loans available.
Credit Scores:
>700 = subtract 0.25% pt.,
640 - 660 =  add 0.25 pt.

All Loans - 640 Minimum.
Additional adjustments & restrictions may apply <> Contact us for an analysis and estimate

It's real easy to get a pre-qualification analysis. The results and an estimate will be emailed to you. Just click here to get started.

Rates are subject to change without notice until locked in.
Rates on this Page Last Updated:
04/18/14 10.30 AM
Purchase Loan Application - This is a complete loan application and purchase questionnaire. It should take from 15 to 30 minutes to complete.
  • Click here for a general list of information needed to complete your application.
  • After reviewing your application and credit report, your loan will be submitted for Automated Underwriting prior to calling you to discuss your application unless additional information is needed from you.
  • The results will be emailed to you with an estimate for your review. Rates are subject to change until locked in. Please call our office for details about locking your rate.
  • Your complete loan application and disclosure forms will be overnighted to you for your review and signatures, along with copies for your records. A written list of the required documents needed and a return overnight envelope will also be included for you to return the documents to us.
  • The only upfront costs to you are the credit report/AUS fee($50) & the appraisal fee($470). The appraisal fee cannot be collected until you receive a Good Faith Estimate and Truth In Lending. Click here for more details on the loan process.
Note: If for some reason your loan cannot be approved through our Automated Underwriting Systems and traditional underwriting is required, some additional costs may be required and you will be advised in advance. More details on "Traditional Underwriting" can be found here.

Pre-Qualify

  • This is a short form that only takes a few minutes to complete.
  • It will give us the info we need to pre-qualify you according to your income, debts and funds available for down payment and closing costs.
  • The results will be emailed to you with an estimate for your review.
  • The Pre-Qualify form is primarily designed for borrowers with good credit since NO credit report will be pulled with this prequalification.

Email or call us if you need additional information.

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3-day Right of Recession

Required on Refinance loans only.
Texas homestead law provides for any borrower refinancing their homestead in Texas to have a grace period of 3 business days from the closing date to re-consider the terms of the refinance before the loan becomes final. Details

Second Homes

FHA does not allow purchasing a second home or an investment property with a FHA loan.
However, you may be able to refinance your FHA loan on a second home or investment property using a FHA Streamline Refinance Loan.