FHA Loans

Your Home Matters at Mabrey

An FHA Loan at Mabrey

An FHA loan is a government-subsidized mortgage, insured by the Federal Housing Administration. These loans allow for a lower down payment and lower credit scores than a Conventional Loan. These loans are typically used by first-time home buyers, others who might have little cash on hand for a down payment or those with low credit scores. You don’t need to be a first-time home buyer to qualify for an FHA loan.

Is an FHA loan right for me?

An FHA Loan could be the right mortgage option for you if you are a first-time home buyer or have credit challenges. These loans have less strict requirements than a Conventional Loan for down payments and credit scores, but it comes with the trade-off of paying mortgage insurance for the life of the loan if your down payment is below 10%. A separate FHA appraisal is also required, which is an additional step when compared to a Conventional Loan.


Down Payment

The minimum down payment required for an FHA loan is 3.5% of the purchase price with minimum credit score of 600.

FHA Appraisal

One unique requirement for this loan is an appraisal from an FHA-approved professional that meets FHA minimum property requirements. This step is to ensure that the home is a good investment for both you and the government, who is ensuring your loan for the lender.

Mortgage Insurance

Mortgage insurance is built into every FHA loan, regardless of your down payment amount. If the down payment is less than 10%, you will pay mortgage insurance throughout the life of the loan, and if it’s 10% or higher, mortgage insurance is required for 11 years. This differs from a Conventional Loan where mortgage insurance can be canceled after you reach 20% equity in the home.

Credit Score

The minimum credit score per the government for an FHA loan at Mabrey is 600.

Debit-to-Income Ratio

Your debt-to-income ratio can vary depending on your credit score to be approved for an FHA loan. The DTI cap for a high credit score is 56% and will be 45% for those with lower credit scores

Loan Size

The loan limit for an FHA loan varies by county. In 2023, the limit for a low-cost county is $472,030, while the upper limit for a high-cost county is $1,089,300. You can visit HUD’s website to look up the FHA loan limit for your county.

Benefits of an FHA Loan

  • A lower down payment threshold than a Conventional Loan
  • A higher debt-to-income ratio is allowed for a borrower
  • A lower credit score is allowed to apply for an FHA Loan
  • An FHA Loan allows a borrower to use gifted funds to cover 100% of the down payment and closing costs
  • Loan limits can be extended based on your location


How do I apply for an FHA Loan?

Applying for an FHA Loan is easy at Mabrey Mortgage. Click this link and select the “Apply Now” button to start your online loan application.

Can I refinance an FHA Loan?

Yes, you can. It’s common for those with an FHA Loan to refinance the loan to receive a better interest rate or remove mortgage insurance for their loan. Your credit score, debt-to-income ratio, the amount of equity you have built in your home, as well as your payment history with the loan will determine whether you qualify and how much you can refinance.

Can I have a cosigner on an FHA Loan?

Yes. A cosigner could help a borrower’s loan application be approved as the assets, income and debts of all signers contribute to the decision. So, a cosigner could help lower a borrower’s debt-to-income ratio. Keep in mind that while a cosigner is not a coborrower of the loan, the cosigner would be responsible for making mortgage payments if the borrower defaults on the loan.

When can you drop Private Mortgage Insurance (PMI) in an FHA Loan?

If you make a down payment between 3.5-10% of the purchase price, then PMI will be required for as long as you have the FHA Loan – this is one reason that refinancing out of an FHA Loan is common. If you make a down payment over 10% with an FHA Loan, you will be required to pay PMI for the first 11 years of the loan before it can be removed.

Can I get an FHA Loan for a second home?

There are special circumstances allowing a borrower to get an FHA loan on a second home. While an FHA loan is not allowed for vacation homes, timeshares or investment property, it would be allowed for:

  • A job relocation more than 100 miles away from your primary residence.
  • If you are adding legal dependents and need a bigger home. 
  • You are leaving a multi-family home for a single-family home.
  • If you were a co-borrower on a loan and are now looking for your own loan.
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