A lower door into homeownership.
FHA loans are insured by the Federal Housing Administration, which lets lenders accept a 3.5 percent down payment and credit histories still being rebuilt. For many first-time buyers in Long Beach and Signal Hill, it is the program that makes the purchase possible.
- Insured by
- Federal Housing Administration
- Down payment
- 3.5 percent for borrowers who meet the credit threshold
- Mortgage insurance
- Upfront premium plus a monthly premium
- Loan limits
- Set by county; high-balance available in LA and Orange County
How it works
An FHA loan is a mortgage insured by the Federal Housing Administration. The insurance protects the lender, which is why FHA programs can accept a smaller down payment, a higher debt-to-income ratio and a thinner or recovering credit history than conventional loans typically allow.
The trade-off is mortgage insurance: an upfront premium financed into the loan and a monthly premium that, for most borrowers, stays for the life of the loan. Many FHA borrowers refinance into a conventional loan later, once equity and credit have grown, to remove it.
FHA also offers a streamline refinance for borrowers who already have an FHA loan, with reduced documentation and often no appraisal. Troy uses FHA for purchases, cash-out refinances and streamlines across Southern California.
- First-time buyers with a smaller down payment
- Buyers whose credit history is still being rebuilt after a setback
- Buyers with a higher debt-to-income ratio than conventional guidelines accept
- Owners with an existing FHA loan who want a streamline refinance
- Buyers using gift funds or down-payment assistance for the 3.5 percent
Not sure you fit? Ask. Troy tells people on the first call when a different program serves them better.
What to consider
Program details vary by investor and change over time. These are the questions that decide whether the loan is right for you; Troy confirms the specifics for your file.
Mortgage insurance for the life of the loan
For most FHA loans the monthly premium does not fall off on its own. Plan to refinance later if removing it matters to you.
Property standards
FHA appraisals include minimum property requirements. Homes with safety or structural issues may need repairs before closing.
Primary residence only
FHA loans are for the home you live in, including two-to-four-unit properties where you occupy one unit.
Loan limits
FHA limits are set by county. Los Angeles and Orange County carry high-balance FHA limits well above the national floor.
The process
From the first conversation to funding, you deal with Troy.
Talk with Troy
A short call with Troy about the property, the goal and how you earn. He tells you which programs fit before you send a document.
Pre-approval
Credit, income and assets reviewed by Troy, with the FHA mortgage insurance included in the payment you see.
Appraisal
The FHA appraisal checks value and property condition. Troy walks the report with you before closing.
Closing and funding
Signing is scheduled around you. Troy coordinates escrow so the loan funds on the date you planned.
Questions people ask
General answers. The answer for your file comes from a conversation with Troy, not from a web page.
Does FHA have mortgage insurance?
Yes, an upfront premium financed into the loan and a monthly premium. For most loans the monthly premium stays for the life of the loan, which is why many borrowers refinance to conventional later.
Can the down payment be a gift?
Yes. FHA allows gift funds from family and certain other sources for the down payment and closing costs, with documentation of where the money came from.
Can I buy a duplex with FHA?
Yes. FHA allows two-to-four-unit properties when you occupy one unit, and rental income from the other units may help you qualify.
What is an FHA streamline refinance?
A refinance of an existing FHA loan with reduced documentation and often no appraisal. It is designed to lower the rate or payment with less paperwork.
Related programs
Often considered alongside this one. Troy prices the alternatives so you can see them side by side.
Home purchase
Conventional, FHA, VA, jumbo and down-payment assistance, with a pre-approval that has been underwritten before the letter goes out.
Down-payment assistance
CalHFA and local assistance paired with an FHA, VA or conventional first mortgage to cover part of the down payment or closing costs.
VA loans
Zero-down purchase and refinance options for eligible veterans, service members and surviving spouses, with no monthly mortgage insurance.
Non-traditional credit
A documented history of rent and bills paid on time can stand in for a credit score.
Talk it through with Troy.
No obligation and no credit pull on the first call. Tell him what you’re trying to do and he’ll tell you whether fha loans financing is the right tool, and what it would cost.