FHA Loan Program through the U.S. Department of Housing and Urban Development (HUD).
The Federal Housing Administration (FHA) is part of the U.S. Department of Housing and Urban Development. FHA provides mortgage insurance on loans made by FHA-approved lenders. FHA insures mortgages on single family homes and multifamily properties. Congress created FHA in 1934 to stimulate housing, jobs and provide access to buying a home to more families. Today the FHA program requires a down payment of just 3.5% and recently FHA reduced the cost of their annual mortgage insurance to assist homebuyers with affordability during recent interest rate increases.
Although the FHA program requires a down payment of 3.5%, the U.S. Department of Housing and Urban Development allows and funds ways to provide down payment assistance through community and state housing agencies to low and moderate income households with community grants and state housing agencies are able to finance the down payment and closing costs assistance with a separate 2nd mortgage. Other non-profit organizations are also allowed to help with down payment assistance programs and gifts from family members are also acceptable with FHA guidelines.
At First Class Home Mortgage we are always looking to expand ways to help families access to affordable housing. Currently we participate with lenders and housing agencies to provide down payment assistance using the following programs:
- Local city and county grant programs
- Utah Housing
- Chenoa Down Payment Assistance
- Boost Down Payment Assistance
- Within Reach Down Payment Assistance
Each of these programs have their own set of guidelines and limitations. Call or apply online so we can help you find the right Down Payment Assistance program that fits your situation.
Q and A:
Q: Does FHA limit their program to first-time homebuyers?
A: NO the FHA loan program is available to repeat and first-time homebuyers for owner occupied single and 2-4 unit properties. However some, but not all of the Down Payment Assistance programs may require borrowers to be first-time homebuyers.
Q: Does FHA have a borrower or household income restriction?
A: NO the FHA loan program does not have an income cap on the household or borrowers income. However most, but not all of the Down Payment Assistance programs will have income restrictions to qualify for assistance.
Q: What is the difference between qualified income caps and household income caps?
A: Income limitations on Qualified Income refers to the income used by the borrower(s) that will be obligated to the loan and any income from other household members will not be evaluated. For example; The income cap for a Down Payment assistance program is $72,000 per year. The borrower makes $76,000 using overtime pay and $71,000 if overtime is excluded. The lender can submit the loan using $71,000 to qualify and exclude the overtime pay to qualify for assistance.
In the case of Household Income, the entire household income can not exceed the income cap. For example; The household income cap is $72,000 for a family of 4 and only one person will be on the loan using an income of $70,000. However the borrower’s spouse has an income source of $12,000 per year and will need to be added as other household income, making the total $82,000. In this case, the applicant would not qualify for assistance.
Q: Does a FHA Loan have a limit on the loan amount?
A: YES, FHA loan limits are determined by median sales price values in each metropolitan area and can change from state to state and county to county. For example the maximum loan amount in Salt Lake County for a single family home is $619,850 and in Iron county is $472,030. The limit is placed on the loan amount, not the sales price. A borrower in Salt Lake County can buy a home with a sales price of $700,000 but if they want FHA financing, they will need to have a down payment of $80,150 to finance the maximum amount of $619,850. Click the link to check FHA mortgage limits.
