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What Buyers Need to Know About the New FHA Financing

There have been some important changes to FHA financing, resulting in more buyers being able to qualify. Here are some important facts.

No Income Limit
Buyers in higher income brackets can now take advantage of FHA financing.

Low Down Payment
You can purchase with 3.5% down and those funds can be gifted to you from a family member. Your family member simply needs to provide verification that they already had the funds in their account.

Seller Contributions
You may ask the seller to pay up to 6% of closing costs, points, and/or pre-paids. Your closings costs may not total 6%, so be sure to obtain an estimate from your lender before negotiating a specific amount to be paid by the seller.

FAQs About The First Time Buyer Tax Credit

IRS Tax Credit Form

Purchase Price Limits
Maximum purchase prices still apply. The limits vary by county.

FHA Price Limit Search by County

Condo Restrictions
If you are purchasing a condominium unit, the condo complex must be FHA Approved. If the complex is not already approved, your lender may be able to obtain spot approval if the complex meets certain criteria and your lender is willing to go through the process.

FHA Approved Complexes

Home Condition
Homes being purchased with FHA financing must not contain safety hazards. When the appraiser visits the home, he/she will identify such hazards and require the items be repaired and re-inspected. Your lender can provide you with a complete list, but the most common items are...

  • Missing Hand Railings on Stairways
  • No Auto-Reverse on Garage Door Openers
  • Peeling Paint

Flipped Properties
FHA has imposed additional restrictions targeting flipped properties. A property will only qualify for an FHA loan if the Seller purchased the property more than 90 days prior to when you are scheduled to purchase the property (calculated from one closing date to the other). The only exception to this rule is if the Seller is a bank.

Additional Appraisals
If the seller purchased the home less than 180 days ago and is selling for the same price or higher, two appraisals are required.

Homes Needing Repair
If you are purchasing a property in need of repair, inquire about an 203(k) FHA loan. It allows you to roll in the cost (up to $35,000) for certain repairs.

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