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FHA Loans - The Basic 203(b) Home Loan

An American TraditionThis post will be the first of six brief articles covering the most important aspects of what is becoming the darling of the real estate market - the venerable FHA home loan.

Established in 1934, the Federal Housing Administration, as stated on its website “….  has served as an economic backstop working hand-in-hand with lenders to provide consumers with access to safe and affordable loans, even during times of tremendous market volatility as with the current subprime situation“.

This post will describe some highlights of the most common type of FHA financing, known as the Section 203(b) loan. 

Subsequent posts will detail credit requirements, income and employment, assets and down payments, the lesser-known FHA “fixer-upper” loan and finally the recently-authorized (and still-evolving) FHA Hope for Homeowners loan.

Maximum Loan Amount
The current limit is the lesser of 125% of the median house price in a given area, or the following amounts:

(An interesting note: the limits in Alaska, Hawaii, Guam and the Virgin Islands are even higher, starting at $1,094,625 for a single family unit - whew!).  Beginning January 1, 2009 the maximum limit for a single family unit will be $625,500 (click here to see the FHA charts for specific limits by location).

Property Types Allowed
As noted above, FHA financing is available for single-family homes, condos and PUDs as well as 2 to 4 family properties provided that they are owner-occupied.  Second homes and investment properties are not allowed.  Condominiums must be FHA approved and HUD recently made it somewhat easier for a lender to initiate the approval process if necessary.

Other Notable Features

Watch for the next article in this series to be posted very shortly which will detail the credit requirements for obtaining an FHA home loan.

Contact Paul at (800) 775-7334 or paulforloans@aol.com

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  1. FHA Loans - Credit Requirements

    [...] is the second in a series of six posts that deal with important aspects of FHA financing. The first post provided an overview of the program. This post will detail the credit requirements necessary to [...]

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