The FHA Mortgage Loan

FHA Mortgage programs!

The Federal Housing Administration is the largest mortgage insurer in the world! You get an FHA mortgage through an approved lender. GVC Mortgage is a Direct FHA Mortgage Lender and we are happy to discuss how you can qualify.




The 12 FHA programs that are available to lenders and insured by FHA

#1. Basic Home Mortgage Loan 203(b)

This is the most common FHA mortgage loan program as it allows you to purchase or refinance your principal residence. This mortgage is funded by a lender and then insured by HUD. You may be thinking; how do I get this mortgage? To start, there are FHA credit qualification standards. You are eligible for approximately 96.5% financing. And you can finance the upfront mortgage insurance due to FHA. The property you want to purchase must be a 1-4-unit structure. Last, your mortgage must be under a certain FHA loan amount. I’m happy to guide you through the steps of qualifying for an FHA mortgage. Call me anytime at (419) 350-8420.

Here are few FHA mortgage thoughts to ponder:

First, the seller can contribute 6% of the purchase price towards closing costs. These are called seller concessions.

Second, since a lender will loan 96.5% the down payment the remainder (the down payment) can be gift funds. According to FHA (, “in order for funds to be considered a gift, there must be no expected or implied repayment of the funds to the donor by the borrower.” Who is allowed to give you gift funds by FHA standards?

  • The borrower’s relative
  • The borrower’s employer or labor union
  • A close friend with a clearly defined and documented interest in the borrower
  • A charitable organization
  • A governmental agency or public entity that has a program providing home ownership assistance to low and moderate income family or first-time home-buyers.

Who can NOT be a gift donor?

  • The seller
  • The real estate agent or broker
  • The builder or
  • An associated entity

According to HUD section 4155.1 5.B.4.e “as a general rule, FHA is not concerned with how a donor obtains gift funds, provided that the funds are not derived in any manner from a party to the sales transaction. Donors may borrow gift funds from any other acceptable source, provided the mortgage borrowers are not obligors to any note to secure money borrowed to the gift.

The mortgage underwriter will verify that all gift rules are followed based on HUD section 4155.1.

#2 Streamline Refinance

In order to do an FHA streamline refinance of your current mortgage it must be an existing FHA-insured mortgage. This type of refinance requires limited borrower credit docs and underwriting. I didn’t say no credit & no underwriting, just limited. Also, it does not mean there are no costs involved in doing a streamline refinance. Here are a few of the basic requirement.

  • Your current mortgage must currently be an FHA insured mortgage.
  • You must be current on your mortgage payments.
  • There must be a documented benefit for you to do a streamline refinance.
  • You can’t cash out in excess of $500. If you need to do a cash out refinance there are other options that we can discuss with you.

If you are interested in refinancing your mortgage this may be an option. If you need to do credit consolidation or need cash out there are other mortgage options that may be better suited for you. But, if you want to do a streamline refinance and lower your interest rate this may be the perfect fit for you.

#3 Rehabilitation Mortgage 203(k)

This mortgage is available to the current homeowner or a homebuyer to finance the refinance or purchase of your home + the cost to rehab the home! This 203(K) rehabilitation mortgage was made available because home improvement loans historically had relatively high interest rates, short repayment terms, and often made you pay back the loan at the end of the term in full (balloon payment). So, FHA’s solution was the 203(k) in order to help you get money to acquire, refinance, and rehabilitate your property. So, how does it work? Great question! When you purchase or refinance your home either the seller is paid or the current mortgage is paid off with the new 203(k) mortgage. Then, the remaining funds you’ve been approved for are placed in an escrow account. Your funds are then released as the rehab is completed. The cost of the rehab must be at least $5,000+. Remember this is still an FHA mortgage so it need to fall within the FHA mortgage limit. To make sure you are under the mortgage limit contact me and I’m happy to check for you (419) 350-8420. How does FHA determine the future value so I can do the home repairs? They take the “whichever is less” approach. Approach #1 – “the value of the property before rehabilitation plus the cost of rehabilitation” Approach #2 – “110% of the appraised value of the property after rehabilitation.” There will normally be a few additional fees such as architectural documents, review of rehab plan, and an additional appraisal fee. FHA gives this guidance on the types of improvement that you can make using an FHA Section 203(k) Rehabilitation Mortgage.

  • Structural alterations and reconstruction
  • Modernization and improvements to the home’s function
  • Elimination of health and safety hazards
  • Changes that improve appearance and eliminate obsolescence
  • Reconditioning or replacing plumbing; installing a well and/or a septic system
  • Adding or replacing roofing, gutters, and downspouts
  • Adding or replacing floors and/or floor treatments
  • Major landscape work and site improvements
  • Enhancing accessibility for a disabled person
  • Making energy conservation improvements
  • Interested in a 203K Rehab Mortgage? Call me to start the process at (419) 350-8420

#4 Condominium Mortgage

I’m looking to buy a condo, can I get an FHA mortgage? Yes, FHA insures condo loans up to 30-year terms for a purchase or a refinance. The condo project must be primarily residential, it must have at least 2 units that are dwelling. The condo can be detached, semi-detached, a row house, a walk-up, mid-rise, high-rise, including those without an elevator. The condo project (building) must be on the FHA-approved condos list. I’m happy to run the condo building through the HUD database and let you know if the property would qualify.

#5 FHA Adjustable Rate Mortgages

Why would you consider doing an adjustable rate FHA mortgage? Well the initial interest rate on a ARM is lower than a FHA fixed rate 30-year mortgage. So, if you plan on only owning the home for a few years or the fixed rate is too high for you then you could consider an arm. FHA offers a standard 1-year ARM and 4 “fha hybrid” ARM products that a lender can loan to you. Here are the adjustable rate mortgage structures that FHA will insure and we can offer to qualified borrowers.

  • 1- and 3-year ARMs may increase by 1 percentage point annually after the initial fixed interest rate period, and 5 percentage points over the life of the mortgage.
  • 5-year ARMs may either allow for increases of 1 percentage point annually, and 5 percentage points over the life of the mortgage; or increase of 2 percentage points annually, and 6 points over the life of the mortgage.
  • 7- and 10-year ARMS may only increase by 2 percentage points annually after the initial fixed interest rate period, and 6 percentage points over the life of the mortgage.

#6 Disaster Victims Mortgages 203(h)

If you live in an area that was designated by the President of the United States as a disaster area and the home was damaged or destroyed to the point that reconstruction or replacement is necessary than you may qualify for a 203(h) mortgage. The same FHA rules apply such as a 1 to 4 home that is used as your primary residence.

Here are the benefits of a 203(h) Disaster Victims Mortgage loan:

  • It is financed 100% by the lender and insured by FHA.
  • The up-front mortgage insurance premium can be financed.
  • Still need to follow the dollar loan limit by FHA standards.
  • Qualifying for the 203(h):
  • Your application must be within 1 year of the President’s declaration of the disaster.
  • Apply through an FHA approved lending institution.

#7 Energy-Efficient FHA Mortgage (EEM)

Your FHA home loan (purchase & refinance) may qualify for the FHA’s solar and wind technologies program. You can now finance the full cost of a new solar (photovoltaic) system by adding it to a regular FHA-insured mortgage.

Here are a few qualifications in order to finance a solar system:

  • The system must be owned, not leased
  • The amount financed for the system cannot exceed 20% of the property’s appraised value
  • You must qualify for the total mortgage amount including the financed portion of the solar system
  • Interested? Reach out to me at (419) 350-8420 to see if you qualify.

#8 HECM (Home Equity Conversion) Reverse FHA Mortgage

The Home Equity Conversion Mortgage is the FHA’s reverse mortgage program for seniors. To begin, you must be a homeowner age 62 or older. You current primary residence should be paid off (or paid down considerably) and you should be living in the home. A reverse mortgage is a way for a senior to supplement their monthly income by withdrawing a portion of your home’s equity.

To begin you need to meet with an approved HECM counselor to discuss program eligibility requirements. Here are some basic requirements that a counselor will review with you.

  • Be 62 years of age or older
  • Own the property
  • Live in the property as your primary residence
  • No federal debt delinquencies
  • Have the financial resources to make ongoing property tax, insurance and HOA dues.
  • Your property must qualify (the counselor or lender will go through these with you).
  • Your income, assets, monthly living expenses, and credit history will be checked
  • Additional requirements & detailed explanation of how the program works will be discussed with you by the approved HECM counselor.

#9 Indian Reservations and Other Restricted Lands (248)

Your family can purchase a home and if eligible can receive approximately 97% financing from a lender. You will need to include your tribal officials in order to sort out a lease or an assigned lot of land. There are program requirements which the tribe must satisfy in order for an FHA mortgage will be insured on the reservation. Go to and search for the 248 program and the details for qualifying for an FHA insured mortgage.

#10 Manufactured Housing (Title 1)

You may have heard the horror stories of buying a manufactured home that had super high interest rates and finance charges. Before FHA (HUD) got involved in insuring manufactured homes the financing charges, interest rates, and terms of those loans often turned buyers away. Under Title I HUD has been providing insurance on manufactured homes which has encouraged lenders to finance these homes. The maximum loan term according to is a 20-year mortgage term. The same FHA standards for approval apply and each borrower’s situation is unique. To learn if your dream home qualifies feel free to contact me at (419) 350-8420.

#11 Title I Home Improvement Loan

The Title I Home Improvement loan can be used alongside the 203(k) Rehabilitation Mortgage that we discussed above. Here are the loan amounts:

  • Single family house – $25,000
  • Manufactured on permanent foundation – $25,090
  • Manufactured house classified as personal property – $7,500
  • Multifamily structure – an average of $12,000 per living unit, up to a total of $60,000
  • Loan Terms for a Title I Home Improvement Loan:
  • Single family house – 20 years
  • Manufactured on permanent foundation – 15 years
  • Manufactured housed classified as personal property – 12 years
  • Multifamily structure – 20 years

Loan Security- Each loan over $7,500 must be secured by a mortgage or deed of trust. Check with your lender about how to qualify for the Title I Home Improvement Loan.

#12 Urban Renewal

HUD will insure mortgage loans on new or rehabbed homes or multifamily homes located in areas that are designated as “urban renewal areas.” HUD will insure supplemental loans to finance improvements that will “enhance and preserve salvageable homes and apartments” in these urban renewal areas.