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The Federal Housing Administration (FHA), a wholly owned government corporation, was established under the National Housing Act of 1934 to improve housing standards and conditions; to provide an adequate home financing system through insurance of mortgages; and to stabilize the mortgage market. FHA was consolidated into the newly established Department of Housing and Urban Development (HUD) in 1965. Since 1934, FHA has been extremely successful in achieving these goals.
MissionFHA continues to exist to serve public purposes that would otherwise go unserved. Its mission today is to:
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contribute to the building and preservation of healthy neighborhoods and communities, |
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maintain and expand homeownership, rental housing and healthcare opportunities, |
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stabilize credit markets in times of economic disruption, |
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operate with a high degree of public and fiscal accountability and |
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recognize and value its customers, staff, constituents and partners. |
Congress created the FHA in 1934 to help the country get back on the road to economic recovery. At the time, the housing industry was flat on its back.
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Two million construction workers had lost their jobs. |
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For homebuyers seeking mortgages, the terms were unrealistic. |
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Mortgage loans terms were limited to 50 percent of the property's market value, with a repayment schedule spread over three to five years, ending in a balloon payment. |
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Given the very unfavorable loan terms, America was primarily a nation of renters. Only 4 in 10 households owned homes. |
During the 1940s, FHA programs helped to finance military housing and then homes for returning veterans and their families.
In the '50s, '60s and '70s, FHA helped to stimulate the production of millions of units of privately owned apartments for elderly, handicapped, and lower income Americans. When soaring inflation and energy costs in the 1970s threatened the economic viability of thousands of private apartment buildings, FHA's emergency financing kept cash-strapped properties afloat.
When a deep recession prompted private mortgage insurers to pull out of oil producing states in the 1980s, FHA moved in to stabilize falling home prices. During the difficult 80s, FHA programs made it possible for potential homebuyers to get the financing they needed.
In the more than 60 years since inception of the FHA, a great deal has changed and Americans are now arguably the best housed people in the world. FHA has contributed substantially to that achievement.
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Thanks to the mortgage insurance products FHA helped to pioneer, such as the long term amortizing loan, the nation's home ownership rate has soared to an all time high of 66 percent as of the third quarter of 1997; well on the way towards the goal of 67.5% by the year 2000. |
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In all, since 1934, FHA has insured over 24 million home mortgages and 38,000 multifamily project mortgages (representing 4.1 million apartments). |
FHA TodayToday, FHA is particularly important to first-time homebuyers. With the National Homeownership Strategy in place since 1995, FHA has placed a great deal of emphasis on marketing and outreach to first-time homebuyers.
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In Fiscal Year 1997, 76 percent of FHA loans originated with first-time homebuyers compared to 68.3 percent in Fiscal Year 1995 and 72.7 percent in Fiscal Year 1996. |
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Loan originations for minority homebuyers are increasing, resulting in 29% of new homeowners in the past three years. |
FHA has been very ambitious in innovating, automating and streamlining processes and programs.
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Many Single Family mortgage insurance programs have been streamlined. For instance, the Section 203(k) purchase and rehabilitation program has been greatly modified. Lenders, Realtors, and non-profit organizations across the country have received training on how to make the Section 203(k) program work for them and consumers. |
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FHA developed new homeownership initiatives, including Homeownership Bridal Registry Accounts, which encouraged couples planning to get married to establish a bridal registry savings account in order to help them accumulate the down payment necessary for purchasing their first home together. |
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FHA has undertaken a demonstration in the area of automated underwriting before beginning to design its own automated underwriting tool as automation saves time and it ensures a more uniform treatment of all applicants. |
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In the area of Manufactured Housing, FHA has worked with the industry to ensure that all manufactured homes meet enhanced safety standards. |
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FHA expanded its Home Equity Conversion Mortgage (HECM) program which allows elderly homeowners in need of income to draw on the equity of their home while remaining in place. |
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Finally, FHA is using the Internet in its business processes. FHA lenders can now submit information concerning their insurance endorsements electronically to a secured world wide web site called the FHA Connection. FHA homeowners can also access information regarding mortgage insurance premium refunds on the HUD/FHA homepage. |
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FHA home loans |
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FHA, also known as the Federal Housing Administration, operates under the control of the Department of Housing and Urban Development (HUD) and has the primary responsibility for administering the government home loan insurance program. This program allows buyers who might otherwise not qualify for a home loan to obtain one because the risk is removed from the lender by FHA.
The most popular FHA home loan program nationwide is the 203(b) FHA home loan (see below) that only requires a minimum of 3% from the borrower and permits 100% of their money needed to close to be a gift from a relative, non-profit organization, or government agency.
The main advantage to a FHA home loan is that the credit criteria for a borrower are not as strict as FNMA or FHLMC. Someone who may have had a few credit problems should not have a problem obtaining FHA financing. Also, FHA home loans are assumable, allowing a person to take over the mortgage without the additional cost of obtaining a new loan. In addition, the seller must pay for part of the "traditional" closing costs (called non-allowable costs) while a borrower's allowable costs can partially be wrapped into the loan. 100% of the down payment and closing costs can be gifted.
The greatest disadvantage of FHA home loans is the upfront mortgage insurance premium (MIP). On a 30 or 15 year FHA home loan that equals to 1.50% of the loan amount in addition to the 0.5% annual renewal premium that a borrower will pay for the life of the loan. In addition, FHA limits the amount a borrower can borrower. | |
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FHA 203b |
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As the centerpiece to the Single Family mortgage program, the 203(b) program allows many fortunate Americans to qualify for a home mortgage when under "conventional" underwriting guidelines, they would have been disqualified.
The following are highlights of this program:
Down payment requirements: Since this mortgage is insured by HUD, the minimum down payment required is 3% of the sales price. Furthermore, the down payment can be a gift from a family member, the government, or a non-profit agency designed to help first-time and low/moderate income home buyers. No cash reserves are required.
Income and employment: There are no limitations placed upon income requirements. As for employment, there are no limitations on a specific length of time at a particular job. However, a 2 year history is required, preferably in the same line of work (education can be counted towards this 2 year history if it is for the same profession the borrower is currently in).
Eligible properties and occupancy requirements: FHA loans are restricted to 1 to 4 unit single family residences that are new, under construction, or existing (i.e. resale properties), condominiums, and townhomes. Homes located in a PUD (planned urban development) must be approved by FHA or VA. Also, mobile homes with a permanent foundation, taxed as real property, and built after June 16, 1976 are eligible. All FHA insured properties must be owner-occupied.
Closing Costs: HUD has created a list of allowable and non-allowable closing costs that may be charged to the home buyer. Non-allowable closing costs generally are referred to as "garbage fees" or "junk fees" and include costs such as the lender's tax service or document preparation fees.
Qualifying ratios: HUD limits a borrower's monthly payment not to exceed 29% of their gross monthly income. A borrower's total debt (proposed monthly payment plus monthly payments towards credit cards, student loans, car payments, and other installment and revolving credit) cannot exceed 41% of their gross monthly income.
Mortgage Insurance Premium: There is a 1.50% fee for a 30 or 15 year mortgage, assessed at the time of originating a FHA mortgage that is paid to HUD that can be wrapped into the loan. This fee goes towards maintaining the FHA insurance program. Furthermore, the borrower will pay 0.5% per year MIP renewal premium for the life of the loan. This is paid monthly. It is important to note that condominiums are exempt from the upfront mortgage insurance premium, but a borrower would still be required to pay the monthly renewal premium.
Assumability: Yes. The person assuming the loan must credit qualify for the mortgage and the seller is automatically released from liability with the approval of the lender. | |
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FHA home mortgage loan limits - Texas
| County |
MSA |
1 Unit Loan Limit |
| ANDERSON |
PALESTINE, TX (MICRO) |
$172,632 |
| ANDREWS |
ANDREWS, TX (MICRO) |
$172,632 |
| ANGELINA |
LUFKIN, TX (MICRO) |
$172,632 |
| ARANSAS |
CORPUS CHRISTI, TX (MSA) |
$172,632 |
| ARCHER |
WICHITA FALLS, TX (MSA) |
$172,632 |
| ARMSTRONG |
AMARILLO, TX (MSA) |
$172,632 |
| ATASCOSA |
SAN ANTONIO, TX (MSA) |
$172,632 |
| AUSTIN |
HOUSTON-BAYTOWN-SUGAR LAND, TX (MSA) |
$172,632 |
| BAILEY |
NON-METRO |
$172,632 |
| BANDERA |
SAN ANTONIO, TX (MSA) |
$172,632 |
| BASTROP |
AUSTIN-ROUND ROCK, TX (MSA) |
$177,650 |
| BAYLOR |
NON-METRO |
$172,632 |
| BEE |
BEEVILLE, TX (MICRO) |
$172,632 |
| BELL |
KILLEEN-TEMPLE-FORT HOOD, TX (MSA) |
$172,632 |
| BEXAR |
SAN ANTONIO, TX (MSA) |
$172,632 |
| BLANCO |
NON-METRO |
$172,632 |
| BORDEN |
NON-METRO |
$172,632 |
| BOSQUE |
NON-METRO |
$172,632 |
| BOWIE |
TEXARKANA, TX-TEXARKANA, AR (MSA) |
$172,632 |
| BRAZORIA |
HOUSTON-BAYTOWN-SUGAR LAND, TX (MSA) |
$172,632 |
| BRAZOS |
COLLEGE STATION-BRYAN, TX (MSA) |
$172,632 |
| BREWSTER |
NON-METRO |
$172,632 |
| BRISCOE |
NON-METRO |
$172,632 |
| BROOKS |
NON-METRO |
$172,632 |
| BROWN |
BROWNWOOD, TX (MICRO) |
$172,632 |
| BURLESON |
COLLEGE STATION-BRYAN, TX (MSA) |
$172,632 |
| BURNET |
NON-METRO |
$172,632 |
| CALDWELL |
AUSTIN-ROUND ROCK, TX (MSA) |
$177,650 |
| CALHOUN |
VICTORIA, TX (MSA) |
$172,632 |
| CALLAHAN |
ABILENE, TX (MSA) |
$172,632 |
| CAMERON |
BROWNSVILLE-HARLINGEN, TX (MSA) |
$172,632 |
| CAMP |
NON-METRO |
$172,632 |
| CARSON |
AMARILLO, TX (MSA) |
$172,632 |
| CASS |
NON-METRO |
$172,632 |
| CASTRO |
NON-METRO |
$172,632 |
| CHAMBERS |
HOUSTON-BAYTOWN-SUGAR LAND, TX (MSA) |
$172,632 |
| CHEROKEE |
JACKSONVILLE, TX (MICRO) |
$172,632 |
| CHILDRESS |
NON-METRO |
$172,632 |
| CLAY |
WICHITA FALLS, TX (MSA) |
$172,632 |
| COCHRAN |
NON-METRO |
$172,632 |
| COKE |
NON-METRO |
$172,632 |
| COLEMAN |
NON-METRO |
$172,632 |
| COLLIN |
DALLAS-PLANO-IRVING, TX METROPOLITAN DIVISION |
$172,632 |
| COLLINGSWORTH |
NON-METRO |
$172,632 |
| COLORADO |
NON-METRO |
$172,632 |
| COMAL |
SAN ANTONIO, TX (MSA) |
$172,632 |
| COMANCHE |
NON-METRO |
$172,632 |
| CONCHO |
NON-METRO |
$172,632 |
| COOKE |
GAINESVILLE, TX (MICRO) |
$172,632 |
| CORYELL |
KILLEEN-TEMPLE-FORT HOOD, TX (MSA) |
$172,632 |
| COTTLE |
NON-METRO |
$172,632 |
| CRANE |
NON-METRO |
$172,632 |
| CROCKETT |
NON-METRO |
$172,632 |
| CROSBY |
LUBBOCK, TX (MSA) |
$172,632 |
| CULBERSON |
NON-METRO |
$172,632 |
| DALLAM |
NON-METRO |
$172,632 |
| DALLAS |
DALLAS-PLANO-IRVING, TX METROPOLITAN DIVISION |
$172,632 |
| DAWSON |
LAMESA, TX (MICRO) |
$172,632 |
| DE WITT |
NON-METRO |
$172,632 |
| DEAF SMITH |
HEREFORD, TX (MICRO) |
$172,632 |
| DELTA |
DALLAS-PLANO-IRVING, TX METROPOLITAN DIVISION |
$172,632 |
| DENTON |
DALLAS-PLANO-IRVING, TX METROPOLITAN DIVISION |
$172,632 |
| DICKENS |
NON-METRO |
$172,632 |
| DIMMIT |
NON-METRO |
$172,632 |
| DONLEY |
NON-METRO |
$172,632 |
| DUVAL |
NON-METRO |
$172,632 |
| EASTLAND |
NON-METRO |
$172,632 |
| ECTOR |
ODESSA, TX (MSA) |
$172,632 |
| EDWARDS |
NON-METRO |
$172,632 |
| EL PASO |
EL PASO, TX (MSA) |
$172,632 |
| ELLIS |
DALLAS-PLANO-IRVING, TX METROPOLITAN DIVISION |
$172,632 |
| ERATH |
STEPHENVILLE, TX (MICRO) |
$172,632 |
| FALLS |
NON-METRO |
$172,632 |
| FANNIN |
NON-METRO |
$172,632 |
| FAYETTE |
NON-METRO |
$172,632 |
| FISHER |
NON-METRO |
$172,632 |
| FLOYD |
NON-METRO |
$172,632 |
| FOARD |
NON-METRO |
$172,632 |
| FORT BEND |
HOUSTON-BAYTOWN-SUGAR LAND, TX (MSA) |
$172,632 |
| FRANKLIN |
NON-METRO |
$172,632 |
| FREESTONE |
NON-METRO |
$172,632 |
| FRIO |
NON-METRO |
$172,632 |
| GAINES |
NON-METRO |
$172,632 |
| GALVESTON |
HOUSTON-BAYTOWN-SUGAR LAND, TX (MSA) |
$172,632 |
| GARZA |
NON-METRO |
$172,632 |
| GILLESPIE |
NON-METRO |
$172,632 |
| GLASSCOCK |
NON-METRO |
$172,632 |
| GOLIAD |
VICTORIA, TX (MSA) |
$172,632 |
| GONZALES |
NON-METRO |
$172,632 |
| GRAY |
PAMPA, TX (MICRO) |
$172,632 |
| GRAYSON |
SHERMAN-DENISON, TX (MSA) |
$172,632 |
| GREGG |
LONGVIEW, TX (MSA) |
$172,632 |
| GRIMES |
NON-METRO |
$172,632 |
| GUADALUPE |
SAN ANTONIO, TX (MSA) |
$172,632 |
| HALE |
PLAINVIEW, TX (MICRO) |
$172,632 |
| HALL |
NON-METRO |
$172,632 |
| HAMILTON |
NON-METRO |
$172,632 |
| HANSFORD |
NON-METRO |
$172,632 |
| HARDEMAN |
NON-METRO |
$172,632 |
| HARDIN |
BEAUMONT-PORT ARTHUR, TX (MSA) |
$172,632 |
| HARRIS |
HOUSTON-BAYTOWN-SUGAR LAND, TX (MSA) |
$172,632 |
| HARRISON |
MARSHALL, TX (MICRO) |
$172,632 |
| HARTLEY |
NON-METRO |
$172,632 |
| HASKELL |
NON-METRO |
$172,632 |
| HAYS |
AUSTIN-ROUND ROCK, TX (MSA) |
$177,650 |
| HEMPHILL |
NON-METRO |
$172,632 |
| HENDERSON |
ATHENS, TX (MICRO) |
$172,632 |
| HIDALGO |
MCALLEN-EDINBURG-PHARR, TX (MSA) |
$172,632 |
| HILL |
NON-METRO |
$172,632 |
| HOCKLEY |
LEVELLAND, TX (MICRO) |
$172,632 |
| HOOD |
GRANBURY, TX (MICRO) |
$172,632 |
| HOPKINS |
SULPHUR SPRINGS, TX (MICRO) |
$172,632 |
| HOUSTON |
NON-METRO |
$172,632 |
| HOWARD |
BIG SPRING, TX (MICRO) |
$172,632 |
| HUDSPETH |
NON-METRO |
$172,632 |
| HUNT |
DALLAS-PLANO-IRVING, TX METROPOLITAN DIVISION |
$172,632 |
| HUTCHINSON |
BORGER, TX (MICRO) |
$172,632 |
| IRION |
SAN ANGELO, TX (MSA) |
$172,632 |
| JACK |
NON-METRO |
$172,632 |
| JACKSON |
NON-METRO |
$172,632 |
| JASPER |
NON-METRO |
$172,632 |
| JEFF DAVIS |
NON-METRO |
$172,632 |
| JEFFERSON |
BEAUMONT-PORT ARTHUR, TX (MSA) |
$172,632 |
| JIM HOGG |
NON-METRO |
$172,632 |
| JIM WELLS |
ALICE, TX (MICRO) |
$172,632 |
| JOHNSON |
FORT WORTH-ARLINGTON, TX METROPOLITAN DIVISION |
$172,632 |
| JONES |
ABILENE, TX (MSA) |
$172,632 |
| KARNES |
NON-METRO |
$172,632 |
| KAUFMAN |
DALLAS-PLANO-IRVING, TX METROPOLITAN DIVISION |
$172,632 |
| KENDALL |
SAN ANTONIO, TX (MSA) |
$172,632 |
| KENEDY |
KINGSVILLE, TX (MICRO) |
$172,632 |
| KENT |
NON-METRO |
$172,632 |
| KERR |
KERRVILLE, TX (MICRO) |
$172,632 |
| KIMBLE |
NON-METRO |
$172,632 |
| KING |
NON-METRO |
$172,632 |
| KINNEY |
NON-METRO |
$172,632 |
| KLEBERG |
KINGSVILLE, TX (MICRO) |
$172,632 |
| KNOX |
NON-METRO |
$172,632 |
| LA SALLE |
NON-METRO |
$172,632 |
| LAMAR |
PARIS, TX (MICRO) |
$172,632 |
| LAMB |
NON-METRO |
$172,632 |
| LAMPASAS |
KILLEEN-TEMPLE-FORT HOOD, TX (MSA) |
$172,632 |
| LAVACA |
NON-METRO |
$172,632 |
| LEE |
NON-METRO |
$172,632 |
| LEON |
NON-METRO |
$172,632 |
| LIBERTY |
HOUSTON-BAYTOWN-SUGAR LAND, TX (MSA) |
$172,632 |
| LIMESTONE |
NON-METRO |
$172,632 |
| LIPSCOMB |
NON-METRO |
$172,632 |
| LIVE OAK |
NON-METRO |
$172,632 |
| LLANO |
NON-METRO |
$172,632 |
| LOVING |
NON-METRO |
$172,632 |
| LUBBOCK |
LUBBOCK, TX (MSA) |
$172,632 |
| LYNN |
NON-METRO |
$172,632 |
| MADISON |
NON-METRO |
$172,632 |
| MARION |
NON-METRO |
$172,632 |
| MARTIN |
NON-METRO |
$172,632 |
| MASON |
NON-METRO |
$172,632 |
| MATAGORDA |
BAY CITY, TX (MICRO) |
$172,632 |
| MAVERICK |
EAGLE PASS, TX (MICRO) |
$172,632 |
| MCCULLOCH |
NON-METRO |
$172,632 |
| MCLENNAN |
WACO, TX (MSA) |
$172,632 |
| MCMULLEN |
NON-METRO |
$172,632 |
| MEDINA |
SAN ANTONIO, TX (MSA) |
$172,632 |
| MENARD |
NON-METRO |
$172,632 |
| MIDLAND |
MIDLAND, TX (MSA) |
$172,632 |
| MILAM |
NON-METRO |
$172,632 |
| MILLS |
NON-METRO |
$172,632 |
| MITCHELL |
NON-METRO |
$172,632 |
| MONTAGUE |
NON-METRO |
$172,632 |
| MONTGOMERY |
HOUSTON-BAYTOWN-SUGAR LAND, TX (MSA) |
$172,632 |
| MOORE |
DUMAS, TX (MICRO) |
$172,632 |
| MORRIS |
NON-METRO |
$172,632 |
| MOTLEY |
NON-METRO |
$172,632 |
| NACOGDOCHES |
NACOGDOCHES, TX (MICRO) |
$172,632 |
| NAVARRO |
CORSICANA, TX (MICRO) |
$172,632 |
| NEWTON |
NON-METRO |
$172,632 |
| NOLAN |
SWEETWATER, TX (MICRO) |
$172,632 |
| NUECES |
CORPUS CHRISTI, TX (MSA) |
$172,632 |
| OCHILTREE |
NON-METRO |
$172,632 |
| OLDHAM |
NON-METRO |
$172,632 |
| ORANGE |
BEAUMONT-PORT ARTHUR, TX (MSA) |
$172,632 |
| PALO PINTO |
MINERAL WELLS, TX (MICRO) |
$172,632 |
| PANOLA |
NON-METRO |
$172,632 |
| PARKER |
FORT WORTH-ARLINGTON, TX METROPOLITAN DIVISION |
$172,632 |
| PARMER |
NON-METRO |
$172,632 |
| PECOS |
NON-METRO |
$172,632 |
| POLK |
NON-METRO |
$172,632 |
| POTTER |
AMARILLO, TX (MSA) |
$172,632 |
| PRESIDIO |
NON-METRO |
$172,632 |
| RAINS |
NON-METRO |
$172,632 |
| RANDALL |
AMARILLO, TX (MSA) |
$172,632 |
| REAGAN |
NON-METRO |
$172,632 |
| REAL |
NON-METRO |
$172,632 |
| RED RIVER |
NON-METRO |
$172,632 |
| REEVES |
PECOS, TX (MICRO) |
$172,632 |
| REFUGIO |
NON-METRO |
$172,632 |
| ROBERTS |
PAMPA, TX (MICRO) |
$172,632 |
| ROBERTSON |
COLLEGE STATION-BRYAN, TX (MSA) |
$172,632 |
| ROCKWALL |
DALLAS-PLANO-IRVING, TX METROPOLITAN DIVISION |
$172,632 |
| RUNNELS |
NON-METRO |
$172,632 |
| RUSK |
LONGVIEW, TX (MSA) |
$172,632 |
| SABINE |
NON-METRO |
$172,632 |
| SAN AUGUSTINE |
NON-METRO |
$172,632 |
| SAN JACINTO |
HOUSTON-BAYTOWN-SUGAR LAND, TX (MSA) |
$172,632 |
| SAN PATRICIO |
CORPUS CHRISTI, TX (MSA) |
$172,632 |
| SAN SABA |
NON-METRO |
$172,632 |
| SCHLEICHER |
NON-METRO |
$172,632 |
| SCURRY |
SNYDER, TX (MICRO) |
$172,632 |
| SHACKELFORD |
NON-METRO |
$172,632 |
| SHELBY |
NON-METRO |
$172,632 |
| SHERMAN |
NON-METRO |
$172,632 |
| SMITH |
TYLER, TX (MSA) |
$172,632 |
| SOMERVELL |
GRANBURY, TX (MICRO) |
$172,632 |
| STARR |
RIO GRANDE CITY, TX (MICRO) |
$172,632 |
| STEPHENS |
NON-METRO |
$172,632 |
| STERLING |
NON-METRO |
$172,632 |
| STONEWALL |
NON-METRO |
$172,632 |
| SUTTON |
NON-METRO |
$172,632 |
| SWISHER |
NON-METRO |
$172,632 |
| TARRANT |
FORT WORTH-ARLINGTON, TX METROPOLITAN DIVISION |
$172,632 |
| TAYLOR |
ABILENE, TX (MSA) |
$172,632 |
| TERRELL |
NON-METRO |
$172,632 |
| TERRY |
NON-METRO |
$172,632 |
| THROCKMORTON |
NON-METRO |
$172,632 |
| TITUS |
MOUNT PLEASANT, TX (MICRO) |
$172,632 |
| TOM GREEN |
SAN ANGELO, TX (MSA) |
$172,632 |
| TRAVIS |
AUSTIN-ROUND ROCK, TX (MSA) |
$177,650 |
| TRINITY |
NON-METRO |
$172,632 |
| TYLER |
NON-METRO |
$172,632 |
| UPSHUR |
LONGVIEW, TX (MSA) |
$172,632 |
| UPTON |
NON-METRO |
$172,632 |
| UVALDE |
UVALDE, TX (MICRO) |
$172,632 |
| VAL VERDE |
DEL RIO, TX (MICRO) |
$172,632 |
| VAN ZANDT |
NON-METRO |
$172,632 |
| VICTORIA |
VICTORIA, TX (MSA) |
$172,632 |
| WALKER |
HUNTSVILLE, TX (MICRO) |
$172,632 |
| WALLER |
HOUSTON-BAYTOWN-SUGAR LAND, TX (MSA) |
$172,632 |
| WARD |
NON-METRO |
$172,632 |
| WASHINGTON |
BRENHAM, TX (MICRO) |
$172,632 |
| WEBB |
LAREDO, TX (MSA) |
$172,632 |
| WHARTON |
EL CAMPO, TX (MICRO) |
$172,632 |
| WHEELER |
NON-METRO |
$172,632 |
| WICHITA |
WICHITA FALLS, TX (MSA) |
$172,632 |
| WILBARGER |
VERNON, TX (MICRO) |
$172,632 |
| WILLACY |
RAYMONDVILLE, TX (MICRO) |
$172,632 |
| WILLIAMSON |
AUSTIN-ROUND ROCK, TX (MSA) |
$177,650 |
| WILSON |
SAN ANTONIO, TX (MSA) |
$172,632 |
| WINKLER |
NON-METRO |
$172,632 |
| WISE |
FORT WORTH-ARLINGTON, TX METROPOLITAN DIVISION |
$172,632 |
| WOOD |
NON-METRO |
$172,632 |
| YOAKUM |
NON-METRO |
$172,632 |
| YOUNG |
NON-METRO |
$172,632 |
| ZAPATA |
NON-METRO |
$172,632 |
| ZAVALA |
NON-METRO |
$172,632 |
HUD site for FHA Mortgage Limits
https://entp.hud.gov/idapp/html/hicostlook.cfm
This site allows you to look up the FHA mortgage limits for your area or several areas, and then list them by state, county, or Metropolitan Statistical Area.
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fha faq |
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Is FHA financing complicated?
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Who qualifies for a FHA home loan?
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Is it true that the down payment can be gifted?
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What is the minimum amount of money I need to buy a home with a FHA mortgage?
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I have had a bankruptcy in recent years. Can I get a FHA loan?
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Is the upfront mortgage insurance premium negotiable?
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How long does it take to receive my MIP refund?
Is FHA financing complicated?
Years ago, FHA financing was more complicated than conventional financing. However changes over the years have streamlined the FHA loan process and in many cases, FHA home loans are easier than conventional financing.
Who qualifies for a FHA home loan?
The program is open to virtually everyone. There are a few restrictions placed upon credit and residency that may preclude someone from obtaining a FHA home loan.
Is it true that the down payment can be gifted?
Yes. Current FHA guidelines permit a relative, a governmental agency, or approved non-profit organization to gift the borrower's down payment. A gift, according to HUD, is just that--a gift. HUD does not permit the borrower to repay the gift as a stipulation of giving the gift.
What is the minimum amount of money I need to buy a home with a FHA mortgage?
The National Housing Act requires the minimum cash investment to be 3 percent of the sales price. Even though the actual down payment may be less than 3 percent, the balance would go towards the borrower's closing costs. In the event that there are no closing costs, the down payment would be increased to 3 percent.
I have had a bankruptcy in recent years. Can I get a FHA loan?
Generally a bankruptcy will not preclude a borrower from obtaining a FHA loan. Ideally, a borrower should have re-established a minimum of two credit accounts (such as a credit card, car loan, etc.) and wait 2 years since the discharge of a Chapter 7 bankruptcy or have a minimum of 1 year of repayment with a Chapter 13 (the borrower must also seek permission of the courts to allow this). Furthermore, the borrower should not have any late payments, collections, or credit charge-offs since the discharge of the bankruptcy. If a borrower has suffered through extenuating circumstances (such as surviving cancer but had to declare bankruptcy because the medical bills were to much), special exceptions can be made (rarely).
Is the upfront mortgage insurance premium negotiable?
No. In order to cover some of the costs incurred by HUD for FHA loans, they must assess the upfront and monthly mortgage insurance to the home buyer. This upfront fee equals 1.50% and the borrower will have to pay 0.5% annually in mortgage insurance premiums. However, if you are buying a condominium, you do not have to pay the upfront mortgage insurance premium.
How long does it take to receive my MIP refund?
Generally, it takes approximately four to six weeks to receive your MIP refund if you have sold your home and paid off an existing FHA home loan or refinanced your FHA mortgage to another mortgage other than FHA. If you refinance your property to another FHA loan, a MIP refund credit will be applied to the balance you owe against the home at the time of closing. Former FHA borrowers who think they might be due a refund can call a toll free number, 1-800-697-6967, or write HUD at P.O. Box 23669, Washington DC 20026-3699 | |
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FHA documentation |
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Depending on your situation, you will be asked for documentation to support your income, liabilities, and funds to close. This documentation will establish your credibility as a borrower, your ability to repay the FHA home loans and your willingness to repay the loan.
The following is a list of documents that will be required to process your FHA mortgage as required by HUD:
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One full month's worth of paystubs
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Last 2 years W-2's (salaried income) and / or last 2 years tax returns with all schedules (commission, dividend, rental income or self-employed borrowers)
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Copies of social security, pension, and/or retirement award letters (if applicable)
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Last three months bank statement for all accounts - all pages
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Current statements for all investment accounts - all pages
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Documentation to support funds to close
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Explanation for any credit derogatories
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Bankruptcy and discharge paperwork (if applicable) - all pages
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Divorce decree and any settlement paperwork (if applicable)
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Copy of your driver's license and social security card | |
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FHA credit issues |
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Credit reports are to an extent a dossier of a person that may have a significant impact upon their life. Almost everything that we do financially is reported, collected, and stored in each persons credit profile. What we do in our lives can directly affect how favorable or unfavorable the reported information appears. Often times we do things, unbeknownst to us, that have a negative impact upon our credit status. The following is a list and explanation of many adverse actions that will ultimately affect how others view your credit history.
1) Debt. Debt is a word the financial industry uses to describe any situation that you borrow money. "Too much debt" is how the industry describes situations where people borrow more money than they can easily repay. There are a lot of types of debt: credit card debt, department store debt, charge accounts, auto loans, student loans, mortgages, and money that you may owe the Internal Revenue Service. You might also borrow from parents, relatives, and friends, although those debts may not be reflected in your credit report.
Your ability to borrow more money or to have your credit extended is directly reflected by how much debt you carry. Mortgage lenders, for example, determine your purchasing ability by applying a debt-to-income ratio (a ratio that is calculated by totalling your monthly debt payments plus the proposed monthly debt payment divided by your gross monthly income). Too high of a debt-to-income ratio reflects greater risk with the loan and may result in rejection of the credit application. Most mortgage lenders will allow you to pay up to 42 percent of your gross monthly income in debt service. Of course this may vary depending upon the loan size, the type of loan, and the type of property you are purchasing.
2) Late payments. If you're chronically late in paying your bills, you've got a late payment problem. It can be a severe blemish on your credit report for lenders prefer to lend money to people who repay debt in a timely manner.
How late is late? If you don't pay your Visa bill by the due date, you're late and it may show up on your credit report. If you fail to make a payment all together, a past due notice will be sent to you and you may be assessed a finance charge. If you're so late that you stop paying entirely on the account, it is likely that the matter will be turned over to a collection agency, that will be reported on your credit history as well as a late payment notice.
How long does a late payment stay in your credit history? Typically, a late payment will appear for two years, though credit bureaus may keep them on your credit report for up to seven years. However if you missed only one payment in the last two years and you have been current on the account for the past 18 months and you have a reasonable explanation for the late payment, it is unlikely that a lender will deny you of credit solely on the basis of the late payment. How you are coping with current credit issues is far more important.
3) Bankruptcy. Sometimes the financial burdens of life become so overwhelming that a person is left with only one choice-to file for bankruptcy. A tragedy may have occurred in one's life, such as the loss of a spouse or a job, or a person may have foolishly over extended their credit and is no longer able to keep up with their debt. The reasons are many and the consequences are severe. Once you've been declared bankrupt, a judge discharges your debts and, to a great degree, wipes your financial slate clean. Sounds easy and simple but it is not. Bankruptcy can be expensive and time-consuming and forever you will feel the stigma of it. Most negative information on your credit report is kept for up to seven years; a bankruptcy can stain your credit report for as long as 10 years.
Bankruptcy is a significant credit hurdle, but it can be overcome. The key to overcoming a bankruptcy is to re-establish credit and show that you are no longer a credit risk. Most people are left only with the option of secured credit cards where they must closely monitor their spending habits so not to over extend themselves again or must suffer from higher interest rates on loans so that they can put themselves on the road to a good credit profile.
4) Errors. Because of the volume of information that is being cataloged and entered daily into the credit databases, errors have been known to have happen. . Many people have been turned down for credit because a $5,000 collection account appears on their report for a credit card that they never had. This is most commonly seen when two people share the same name (like a father and son) or have similar social security numbers. However, one good reason for checking up on your credit report is that someone else may be using your social security number or credit card numbers and playing havoc with your personal credit history.
5) Repossessions. If you buy a car, furniture or appliances on an installment plan (where you pay a little bit of interest and principal each month), and you fail to make a payment or two, the company that sold you the item may require you to give back the merchandise until it is paid for. If you refuse to give it back, the company may come by and take it (repossess it). Repossessions are usually noted in your credit report.
6) Accounts turned over to a collection agency. If you don't pay a bill, you will probably receive a threatening letter from a collection agency hired by the creditor to collect the overdue amount. This is considered a collection account. If you receive such a letter, it should tip you off to a potential problem with your credit history. Not only will the creditor report to the bureaus that your account is delinquent, but collection agencies usually report to the bureaus of the collection account as well as their efforts to collect on past due bills. It is important to remember that if you pay off a debt from a collection agency that you make sure you have them send you a letter stating that the debt has been completely satisfied and no further action on their part or the creditor is necessary.
7) Too many credit inquiries. It is common place, for example, to have several car dealerships to pull your credit information whenever you are out shopping for a new car. Whenever you apply for a new charge card, a loan or to have someone extend you some form of credit, an inquiry is reported on your credit report. Seems harmless but lenders become worried if you appear to be on a credit-gathering spree for it could mean that you are out to expand your credit quickly for a specific purchase or that there are new credit obligations on your report that are not showing up. Too many credit inquiries can spell trouble which would make you a bigger risk than what they would be willing to undertake. Credit inquiries stay on your credit report for two years (but most lenders are particularly interested in the inquiry activity within the last six months).
8) Too much available credit. One of the easiest credit issues to fix is having too much available credit. Even if you have never carried a balance on any credit card and if you have a lot of cards, creditors simply add up the balance as potential debt you could take on at any moment.
9) Absence of credit. Again, this is another credit issue that you can easily overcome. Many young people, for example, often fall prey to not having a sufficient credit history built up and as a result are turned down for credit. Many lenders do not want to take the risk of extending debt when they don't know how well someone can pay back their obligation. |
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FHA Income |
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HUD requires a borrower to have sufficient and adequate income to cover the repayment of the mortgage. Before a borrower can be approved for a FHA home loan, the stability of income and the continuance of the borrower's income must be established through acceptable sources of income, the borrower's past employment record, and the employer's confirmation of continued employment must be established.
Stability of a person's income is generally derived from their employment history. HUD requires verification for the previous two full years and must be documented through lender verifications of previous employment or W-2's. This income must be analyzed to determine whether it can be expected to continue through the first 3 years of the mortgage loan (if the borrower intends to retire during this period, the expected retirement income, social security benefits, etc. should be used). Any gaps in employment must be reasonably explained by the borrower. Schooling or education for the borrower's profession (e.g. nursing school) can be counted towards the 2 year requirement. Allowances for seasonal employment, such as is typical in the building trades for example, may be used.
The following is a break down of the different types of income HUD considers acceptable:
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Salary / W-2 Income
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Overtime or Bonus Income: Both may be used to qualify the borrower as long as the income has been received for the past two years and is likely to continue. An average of the bonus or overtime income over the last 2 years is used
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Part-time Income: Part-time income (second job) may be used in qualifying if the borrower has a 2 year employment history without interruption. Seasonal employment may be used if the borrower can demonstrate a 2 year history and the probability of continuation. Income from part-time positions that does not meet these requirements should be considered as a compensating factor only
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Commission Income: Commission income must be averaged over the previous 2 years. The borrower must provide his/her last 2 years Federal tax returns (1040's) with all schedules. Any un-reimbursed business expenses must be subtracted from the gross income.
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Retirement / Social Security Income: Verification from the source is required. If the income should expire within 3 years, the income cannot be used to qualify the borrower and used only as a compensating factor
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Alimony, Child Support, or Separate Maintenance: Though not required for qualification, a borrower who chooses to use this income must 1) provide a 12 month payment history from the ex-spouse or courts showing timely payment and 2) provide evidence that such payment will continue for at least 3 years. A copy of the divorce decree, settlement agreement, etc. will be necessary.
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Notes Receivable: A copy of the note and evidence that payments have been received for a minimum of 12 months are required. Should the note expire within 3 years, it can be used as a compensating factor only.
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Interest and Dividends: Interest and dividend income may be used provided documentation (such as tax returns or account statements) supports a 2 year history of receipt. This does not include dividend re-investment plans.
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Rental Income: Rent received from investment properties owned by the borrower may be used, subject to the proper documentation. Income from roommates, etc., in a single-family property to be occupied as the borrower's primary residence is not acceptable. Rental income is calculated from the borrower's Schedule E of their 1040's. Depreciation can be added back to the borrower's net rental income. Positive rental income is considered as gross income for qualifying purposes; negative rental income must be treated as a recurring liability. Copies of the leases must support a continuation of the income.
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Self-Employed: A borrower with 25% or more ownership interest in a business is considered self-employed. The income from borrower's self-employed less than one year is not acceptable. Borrower must supply the following: 1) personal tax returns for the most recent 2 years (with all schedules), 2) K-1's, 1120's or 1120S's for the last 2 years, financial statements (profit and loss statement and a balance sheet) for the interim and last 2 years, 3) borrower will have to sign an 8821 or 4506 income taxes release form (see lender). | |
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FHA Funds to close |
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The borrower's cash investment in the property must equal the difference between the amount of the FHA mortgage, excluding any upfront MIP, and the total cost to acquire the property (to include prepaid expenses, closing costs, etc.) All funds must be verified from acceptable sources.
Acceptable sources of these funds include:
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Earnest Money Deposit: If the amount of the earnest money deposit exceeds 2% of the sales price or appears excessive based on the borrower's history of accumulating savings, the deposit amount and source of funds must be verified. Otherwise, satisfactory documentation includes a copy of the borrower's canceled check or verification from the bank.
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Savings and Checking Accounts: The lender must verify these accounts. The borrower will need to provide the last three most recent bank statements. If a large increase in deposits is present or the account was recently opened, an explanation and verification of the source of the deposit must be established. Non-sufficient funds, bounced checks, or account overdrafts will need to be reasonably explained.
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Gift Funds: An outright gift is acceptable if it is from: 1) a relative of the borrower, 2) the borrower's employer or labor union, 3) a charitable organization, or 4) a governmental agency or public entity that has a program established to provide homeownership assistance to low and moderate income families. No repayment of the gift may be expected or implied. Furthermore, a gift letter signed by both the donor and the borrower stating the amount of the gift and that repayment is not required, provides the donor's name, address, phone number, and relationship to the borrower will be required. In addition, verification of the transfer of funds from the donor's account to the borrower's account, via copies of the donor's canceled check, for example, and the borrower's deposit slip or bank statement will be necessary.
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Sales Proceeds: Sale of an asset is considered an acceptable source of income if the borrower provides: 1) copy of the bill of sale or HUD-1 Settlement Statement (for the sale of a home), 2) copy of the check or verification of funds transfer from the buyer of the asset to the borrower, and 3) copy of the borrower's deposit slip or bank statement showing the deposit of the funds into the borrower's bank account.
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Cash Saved at Home (i.e. Mattress Money): Cash must first be deposited in a financial institution or held by the escrow/closing agent. The borrower must provide an explanation of how the funds were accumulated and the length of time taken to do so. The lender must determine the credibility of the savings based on the borrower's income, spending habits, and history of using financial institutions, as well as considering how long it took to accumulate the funds.
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Rent Credit: If the portion of a borrower's current rental payment is to be used to purchase the property the borrower currently occupies, the borrower will need to provide a copy of the rental/lease agreement showing an option to purchase with the clause stating how much of the rental payment is to be used as a rent credit. It is the lender's responsibility to show that the rent payment is above FHA's estimate of fair market rent. If the rent paid by the borrower is less than fair market, or if the seller has agreed to permit the borrower to occupy the property rent-free, this amount must be deducted from the sales price as a sales concession before determining the borrower's maximum insurable FHA loan amount | |
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Gary Whitney
America's Premier Mortgage
6 Lullaby Lane Suite# 100
The Woodlands, TX 77380
Phone: 281-367-8067
Email: GaryWhitney@sbcglobal.net
Proud Member of the BBB Metropolitan Houston
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