FHA Loan Articles & Information for 2021

Welcome to the FHA Loan Information Center. This page offers a wealth of information about the FHA mortgage insurance program. It is a work in progress, with new articles being added every week. The Information Center is provided as a resource for home buyers and borrowers specifically, but lenders may find it useful as well.


The Basics: FHA Loans at a Glance

Not familiar with the FHA loan program? Read the articles below for a basic introduction.

What Is an FHA Loan?
If you’re not familiar with the federal government’s mortgage-insurance program, this article is a great place to start. It explains how these loans work.

Benefits of FHA Loans
These mortgage program isn’t right for everyone. But it does offer advantages for certain types of borrowers, especially those who don’t have a lot of money saved for a down payment.

10 Steps in the Buying Process
The process of buying a house with an FHA-insured home loan is basically the same as it would be with a “regular” or conventional mortgage. But there are a few differences you should know about. This in-depth tutorial walks you through the purchase process in step-by-step fashion.

Disadvantages of Using FHA
This loan program is not for everyone. For some borrowers, the disadvantages far outweigh the benefits. This article explains the possible disadvantages of using an FHA loan to buy a house.

Difference Between FHA and Conventional
This article examines the pros and cons of both types of home loans, and explains how you might choose the right product for your particular situation.

Why It’s Popular With First-Time Buyers
The FHA loan program is not limited to first-time home buyers. But it does offer some enticing advantages for this particular group, such as a low down payment.

FHA loan limits for 2021
Borrowers who use this program to finance a home purchase are limited to a maximum mortgage amount. These limits vary by county, and they sometimes change from one year to the next. Here’s an update on the 2021 limits.


FHA Requirements for Borrowers

What does it take to qualify for an FHA-insured home loan? In short, borrowers need good credit, a manageable level of debt, and a down payment of at least 3.5%. Learn more below.

Minimum Loan Requirements
The Federal Housing Administration published a revised policy handbook for 2022. It includes all of the basic requirements for borrowers. This article provides an overview of those guidelines and is intended for home buyers and borrowers.

Credit Score Requirements
Generally speaking, borrowers who use this program need a credit score of 500 or higher. To qualify for the 3.5% down-payment option, you’ll need a score of 580 or higher.

Credit Score Update for 2021
In January of 2021, we published an updated report on the minimum credit score needed to qualify for an FHA-insured mortgage loan. Apparently, most lenders across the country want to see a score of 550 or higher. That’s based on data provided by Ellie Mae.

Debt-to-Income (DTI) Ratios
When you apply for a loan, the lender will compare your monthly income to your recurring monthly debts. This is known as the DTI ratio, and it’s a key factor in loan approval.

Trends for Back-End Debt Ratios
The article directly above explains HUD’s official guidelines for borrower debt ratios. This article is based on an informal survey of lenders regarding back-end DTI trends.

Self-Employment Income
Borrowers who are self-employed have some additional “hoops” to jump through, when it comes to applying for an FHA loan. Here’s an overview of HUD’s requirements.

Allowable Closing Costs
Mortgage lenders (and other third parties) can charge a variety of fees when generating an FHA-insured home loan. Collectively, these are referred to as closing costs.


Mortgage Rate-Related Articles

Paying Discount Points
Some borrowers choose to pay “discount points” at closing, in exchange for a lower interest rate from the lender. This strategy works best for a long-term stay.

Getting the Lowest Rate
There are strategies you can use to get a lower rate from a lender. But first, you have to understand why mortgage companies assign different rates for different borrowers.