1. Less-Than-Perfect Credit is OK: Each borrower's creditworthiness is considered in context. Some leeway is allowed, even for borrowers who've filed for bankruptcy.
2. Minimum Down Payment is 3.5%: Borrowers can use their own savings to make the down payment or acceptable funds are a gift from a close family member or borrowing against an asset of yours such as a 401(k) or a vehicle owned free & clear.
3. FHA allows sellers, builders, and lenders to pay some or possibly all of your closing costs and prepaid expenses.
4. Because FHA is not a lender, but rather an insurance fund, borrowers need to get their loan through an FHA-approved lender (as opposed to directly from FHA).
5. Two mortgage insurance premiums are required on all FHA loans. The upfront premium is 2.25% of the loan amount on single-family residences and the annual premium is 0.55% of the loan amount in the monthly payment.
6. FHA 203(k) Rehabilition Loan: FHA has two products - the regular 203(k) is like a construction loan and would be in the situation where you had major work to be done that would require permits. The 203(k) Streamline will allow for up to $35,000 in rehabilitation and no major construction or permits can be involved.
7. FHA does not have any income or geographical limits. The loan is intended for borrowers of modest means who otherwise could not qualify to purchase a home. It is not limited to first-time homebuyers. If a borrower will be retaining a home with an FHA loan, they are typically not able to get an FHA loan on another purchase.
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