The Federal Housing Administration (FHA) was established as part of the National Housing Act of 1934 with the goal of improving the housing market. To achieve this, the FHA insures home loans offered by approved lenders, enabling those lenders to provide mortgages to a broader range of buyers while reducing their risk.

By protecting lenders against borrower default, the FHA allows lenders to offer competitive rates to buyers with less-than-perfect credit or limited funds for a down payment. FHA loans can be used for various purposes, including home purchases, refinancing, and even specialized renovation projects. The McDaniel Mortgage Group provides attractive rates and terms on FHA loans in all the states where they are licensed to operate.

FHA Loan Requirements

• Credit Score: A minimum credit score of 580. (Note: This minimum may vary depending on the lender.)

• Down Payment: 3.5% of the purchase price for borrowers with a credit score of at least 580. Borrowers with lower credit scores may qualify if they can make a larger down payment of at least 10%.

• Debt-to-Income Ratio: FHA loans allow for debt-to-income (DTI) ratios of up to 56% in certain cases.

• Property Requirements: Properties must meet FHA standards for safety, security, and soundness (structural integrity).

Loan limits vary by county. For example, in Dallas County, Texas, FHA loan limits range from $563,500 for a single-unit home to $1,083,650 for a four-unit property.