FHA loans are non-conventional mortgages backed by the Federal Housing Administration. They were first developed to create a pathway to homeownership for borrowers who may not get approved for conventional loans. Today, they serve the same purpose. They’re affordable, have minimal down payments, and have easy qualifying requirements. They’re a great option for first-time homebuyers and previous homeowners alike, for the purchase of single- and multifamily homes and even certain approved condos and manufactured homes. If you’re interested in buying a home in Travis, Williamson, Bexar, Comal, Guadalupe and nearby Texas counties, we are here to help. The New Horizon Mortgage, Inc. team in San Antonio has the expertise to help each client find the best-suited mortgage solution.
FHA Loan Eligibility Requirements and Other Basics
FHA loans were first made available in 1934 during the Great Depression, when many people struggled financially. They’re insured by the FHA, a division of the U.S. Department of Housing and Urban Development, and funded by private, FHA-approved lenders. Because the FHA pays out a claim to lenders when a borrower defaults on a loan, the lenders incur less risk approving these loans. This means they open their doors to more borrowers.
FHA loan basic requirements include:
- Only 3.5% required down payment for clients with a credit score of 580+
- Only 10% required down payment for clients with a credit score of 500-579
- An up-front insurance premium of 1.75% of the loan with an annual premium of .45% to 1.05%
- No bankruptcy within the last two years and no foreclosures within the past three years
- Must be up to date with income taxes and any other federal loans, such as federal student loans
- A debt-to-income ratio of up to 42%
These non-conventional loans have fixed interest rates, with terms ranging from 15-30 years. Clients usually pay private mortgage insurance for the full loan term. Some clients may be able to have their lender or builder pay for closing costs for an FHA loan. They can also receive their down payment as a gift from a friend or loved one.
The FHA sets loan limits to mitigate its risk. The limits vary depending on where in Texas you live. In Bexar county, the limits are:
- For a one-family home: $524,400
- For a two-family home: $671,300
- For a three-family home: $811,450
- For a four-family home: $1,008,450
If the home you want and the loan you need exceed these limits, talk to us about alternate home financing solutions.
FHA 203(k) Loans
If you’re interested in purchasing and making repairs to a home (a “fixer-upper”), you may be interested in FHA 203(k) loans. Borrowers use FHA 203(k) for bathroom and kitchen remodels, structural improvements, improvements that make a home more accessible, to add a patio, and much more. With an FHA 203(k), you can secure a loan for the post-repair appraisal value of a home.
We’ve Got the Options You Want
If you’re ready to learn more about FHA loans, and alternative mortgage options such as Home Ready and Home Possible loans, New Horizon Mortgage, Inc. is here for you. From FHA, VA and USDA loans to conforming and jumbo conventional loans, we’ve got the answers you need. We work with top national FHA-approved lenders, so you can feel confident you’re getting the most competitive FHA loan interest rates. We work closely with clients throughout Travis, Williamson, Bexar, Comal, Guadalupe and nearby Texas counties.