At Coast2Coast Mortgage, we understand that the path to homeownership can seem challenging, especially for first-time homebuyers or those with less-than-perfect credit. That's why we're proud to offer FHA loans, which make homeownership possible with lower down payments and more flexible credit requirements.

What Are FHA Loans?

FHA loans are government-insured mortgages designed to help more Americans achieve their dream of homeownership with more flexible qualification requirements. These loans are backed by the Federal Housing Administration (FHA), which provides mortgage insurance to lenders, reducing their risk and allowing them to offer more favorable terms to borrowers.

Your Path to Homeownership

For many Americans, particularly first-time homebuyers, FHA loans represent the most accessible path to homeownership. With lower down payment requirements and more flexible credit guidelines, these loans open doors that might otherwise remain closed.

For home loans up to $472,030 (in most areas), FHA loans provide an excellent option for those looking to enter the housing market. Higher loan amounts are available in high-cost areas.

Key Benefits of FHA Loans

Lower Down Payment

Get started with just 3.5% down payment with a qualifying credit score of 580 or higher. This significantly reduces the upfront cost of buying a home, making homeownership more accessible to those without substantial savings.

Flexible Credit Requirements

More lenient credit requirements make homeownership possible for more buyers. While conventional loans typically require credit scores of 620 or higher, FHA loans may be available to borrowers with scores as low as 580 for a 3.5% down payment, or even 500-579 with a 10% down payment.

Competitive Rates

Government insurance allows lenders to offer competitive interest rates. Because the FHA insures these loans, lenders can offer interest rates that are often comparable to or even lower than conventional loans, despite the higher risk associated with lower credit scores and down payments.

Guidelines For FHA Loans

Credit Score

580+ for 3.5% down, 500-579 for 10% down payment. Your credit score is a key factor in determining your eligibility for an FHA loan and the down payment requirement. The higher your score, the better terms you'll qualify for.

Down Payment

As low as 3.5% with qualifying credit score. This is one of the most attractive features of FHA loans, especially for first-time homebuyers who may not have substantial savings.

Debt Ratio

Up to 50% debt-to-income ratio may be allowed. This means your total monthly debt payments (including your new mortgage) can be up to 50% of your gross monthly income, which is more flexible than many conventional loans.

Property Type

Must be your primary residence and meet FHA standards. The property must be in good condition and meet the FHA's Minimum Property Requirements (MPRs), which ensure the home is safe, sound, and sanitary.

Why Choose an FHA Loan?

FHA loans are particularly beneficial for:

• First-time homebuyers with limited savings for a down payment
• Borrowers with less-than-perfect credit
• Those with higher debt-to-income ratios
• Individuals recovering from financial setbacks like bankruptcy or foreclosure (after waiting periods)

Additionally, FHA loans are assumable, meaning a future buyer could potentially take over your loan terms - a significant benefit in a rising rate environment.

Frequently Asked Questions About FHA Loans

Do FHA loans require mortgage insurance?

Yes, FHA loans require both an upfront mortgage insurance premium (UFMIP) and an annual mortgage insurance premium (MIP). The UFMIP is typically 1.75% of the loan amount and can be financed into the loan. The annual MIP varies based on loan amount, loan-to-value ratio, and loan term, but typically ranges from 0.45% to 1.05% of the loan amount annually, divided into monthly payments.

How long do I have to pay mortgage insurance on an FHA loan?

For most FHA loans, the mortgage insurance premium (MIP) is required for the life of the loan. However, if you make a down payment of 10% or more, the MIP can be removed after 11 years. To eliminate MIP before these timeframes, you would need to refinance into a conventional loan once you have sufficient equity.

Can I use gift funds for my FHA down payment?

Yes, FHA loans allow 100% of the down payment to come from gift funds from an acceptable donor, such as a family member, employer, or charitable organization. The gift must be properly documented with a gift letter stating the funds don't need to be repaid.

Are there limits to how much I can borrow with an FHA loan?

Yes, FHA loan limits vary by county and are based on the median home prices in each area. In 2025, the FHA loan limit for a single-family home in most areas is $472,030, but it can go up to $1,089,300 in high-cost areas. These limits are adjusted annually.