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Is an FHA Loan Right for You?

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We know that for most people buying a home means getting a mortgage to finance your purchase. But with all of the options out there, how do you know which home loan is best for you?


One of your options is to get an FHA loan. FHA stands for the Federal Housing Administration which is a government agency created to increase homeownership across the United States all the way back in 1934. The agency itself doesn’t offer home loans but insures loan that are offered by private lenders (i.e. mortgage companies).

Who is an FHA loan best for?

It’s important to understand the different types of loan programs available to you and what benefits and drawbacks there are to each type.

For example, if you’re looking to find a fixer upper this may not be the right loan program for you. But an FHA loan may be a better fit for you if you have little cash saved up for a down payment or if you don’t have a high credit score.

FHA loan requirements:

  • At least 18 years old to apply
  • Must occupy the home as a primary residence
  • An appraisal must be done by an FHA-approved appraiser
  • Mortgage insurance (MIP) is required
  • Must have 2 years of employment history proving a reliable source of income
  • 620 FICO score requirement with at least 3.5% down payment
  • Student loan payments are factored into the debt-to-income ratio when applying
  • Your debt-to-income ratio must not be higher than 31% or total debt obligation cannot be higher than 43% of your current income

New FHA loan limits for 2021:

The FHA has a maximum loan limit it will insure. These loan limits are updated each year and are influenced by the conventional loan limits set by Fannie Mae and Freddie Mac. Other things like the type of home (i.e. duplex or single-family) can also affect the FHA loan limits. *

For low-cost areas, the loan limit increased from $331, 760 to $356,362. And for high-cost areas (i.e. San Francisco, Calif., and Seattle, Wash.) went up from $765,600 to $822,375. These loan limits are directly tied to both the median home prices and loan limits for conforming loans. You can check the FHA loan limits in your area here.

Will an FHA loan hurt your chances with home sellers?

FHA loans are attractive to home buyers because they require smaller down payments and usually lower credit scores. If you’ve had your Homeowner Strategy Meeting and you’ve decided an FHA loan is a good fit for you, just make sure you’re setting yourself up for success.  One of the best ways you can do this is by becoming a Certified Home Buyer.


Unfortunately, for today’s home buyer, a standard pre-qualification or pre-approval just isn’t good enough anymore. The Churchill Certified Home Buyer program is a game changer and allows you to position yourself as a more reliable buyer which gives you the upper hand during negotiations. Ultimately, it’s just not worth risking your dream home to a more prepared buyer.

Quick tip: Many states have local mortgage programs that may fit your needs as well.

Be sure to compare your loan options to find a mortgage that gives you more. Schedule a Homeowner Strategy Meeting with one of our Home Loan Specialists today, or start with one of our mortgage calculators to look at the numbers and find a mortgage that fits your budget.

The Churchill Certified Home Buyer program is not a commitment to lend funds and is not an approval but is a conditional approval subject to your acceptance of the terms and the conditions being fully satisfied prior to closing. All conditions are subject to final underwriting and final investor approval. The certification is subject to the financial status and credit report(s) of everyone on the application remaining substantially the same until closing, an acceptable contract of sale on a suitable property, collateral (the appraisal, title, survey, condition, and insurance) satisfies the requirements of the lender and loan selected is still available in the market. All closing conditions of the lender must be satisfied including the clear transfer of the title, acceptable and adequate title and hazard insurance, flood certification, and any inspections that are required by the real estate contract. The Certified Home Buyer and Rate Secured programs are not available at all locations.

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