Buying
FHA
Government-insured financing with a 580 credit floor, 3.5% down and pricing that barely notices your score. The cost is mortgage insurance that usually never cancels.
The honest bitThe right answer when credit is thin or bruised, or when a debt-to-income ratio needs the wider FHA box. The wrong answer at 760 FICO and 20% down, where conventional is cheaper on every line.
What this programme actually is
FHA is an insurance programme, not a loan programme. HUD insures the lender against loss, which is why the pricing grid is nearly flat across credit scores: a 620 and a 740 borrower are quoted from the same base rate. That single fact is what makes FHA the cheaper file at the lower end of the credit range.
The premium for that is paid in mortgage insurance. There is an upfront premium of 1.75% added to the loan balance, and an annual premium collected monthly. On a loan taken above 90% LTV, the annual premium runs for the full term of the mortgage. It does not fall off at 80% the way conventional PMI does.
That is why the honest FHA conversation is always about the exit. Most of my FHA files are built with a refinance in mind: get into the house now at a payment that works, then move to conventional once the score recovers or the equity builds.
FHAWhat is included when I run it
- FHA case number ordered and the CAIVRS check run before you write an offer
- Manual underwrite prepared when the automated finding comes back refer
- Compensating factors documented in writing: reserves, residual income, no payment shock
- Appraisal read for FHA minimum property standards before it becomes a repair fight
- Identity-of-interest and gift documentation handled up front
- A written MIP exit plan with the LTV and score you would need for a conventional refinance
How the file moves
- 01Score and derogatory reviewBankruptcy, foreclosure and short-sale seasoning is checked before anything else.
- 02Case number and CAIVRSAn unresolved federal debt stops an FHA file cold, so we look on day one.
- 03Automated underwritingAn approve/eligible finding sets the documentation level. A refer means a manual file and a tighter DTI box.
- 04Pre-approval letterWritten to the FHA limit for the property's county, not to a generic number.
- 05Appraisal and MPS reviewPeeling paint on a pre-1978 house, missing handrails and an open crawlspace are the three most common Richmond call-backs.
- 06Clear to closeUpfront MIP appears on the closing disclosure as a financed amount, not as cash you bring.
Why people choose it
Credit pricing is nearly flat
A 620 mid score is quoted from the same base sheet as a 740. On conventional it would not be.
The widest DTI box
Approve/eligible findings regularly clear the high forties and into the mid fifties with compensating factors.
Assumable
A future buyer can take over your FHA loan and its rate, subject to qualifying. That is a real asset in a higher-rate market.
Non-occupant co-borrower allowed
A parent can join the loan without living in the house, which conventional permits only in narrow cases.
What moves your price
| Factor | How it behaves |
|---|---|
| Mid FICO | 580 is the 3.5% down floor. Most wholesale desks overlay at 600 or 620. |
| Loan-to-value | Put 10% down and the annual MIP term shortens to 11 years instead of the full term. |
| Property condition | Minimum property standards are an underwriting condition, not a courtesy inspection. |
| Prior FHA loan | You generally may not hold two FHA loans at once, with limited relocation exceptions. |
If you put at least 10% down, the annual premium ends after 11 years. Below that it runs for the life of the loan, and the only exit is a refinance into a different programme.
Yes, up to 6% of the sale price on FHA, which is the most generous seller-concession allowance of any common programme.
The Richmond MSA sits above the national floor. These pages use $524,225 for a one-unit property as a sample figure; the limit is set by county and is revised annually.
Two years from a Chapter 7 discharge, or twelve months of on-time payments inside a Chapter 13 with trustee approval. Both are shorter than conventional seasoning.
Is this the right programme for you
Twenty-five minutes on the phone will settle it. If a different programme is cheaper for your file, I will say so.
Three wholesale quotes on the same day's pricing, before you choose.