FHA Loans

The Federal Housing Administration (FHA), a division of the U.S. Department of Housing and Urban Development (HUD), helps expand access to high-quality mortgage loans at affordable rates. Rather than lending directly, the FHA insures loans offered by approved lenders like Griffin Funding.

This government backing reduces lender risk, allowing more borrowers, especially those with limited savings or credit challenges, to qualify. FHA loan interest rates are often competitive, though borrowers should also factor in mortgage insurance when evaluating total loan costs.

When comparing FHA loans vs conventional loans, consider these factors: 

• Creditworthiness: One of the biggest advantages of FHA loans over conventional loans is more flexible credit requirements. While conventional mortgages often require higher credit scores and stronger financial profiles, FHA loans are accessible to borrowers with credit scores as low as 580, or even 500, with a 10% down payment.
• Waiting periods: FHA also allows shorter wait periods after major credit events: just two years after a Chapter 7 bankruptcy, one year into a Chapter 13 repayment plan (with court approval), and three years after a foreclosure in most cases. These more forgiving guidelines help buyers get back into a home sooner, even after financial setbacks.
• Government-backed: Because the government insures these FHA guaranteed loans, lenders can offer them with lower credit minimums, smaller down payments, and competitive interest rates, even if you don’t have perfect credit or a long credit history.

	FHA Loans	Conventional Loans
Government-backed?	FHA LoansYes	Conventional LoansNo
Minimum credit score	FHA Loans500	Conventional Loans620
Minimum down payment	FHA Loans3.5%	Conventional Loans3%
Mortgage insurance required?	FHA LoansYes	Conventional LoansYes for down payment < 20%
Waiting period after credit event	FHA Loans1–3 years	Conventional Loans2–7 years

Your exact rate will depend on several factors, such as:

• Your credit score
• Down payment amount
• Debt-to-income ratio
• Current housing market conditions
• The lender you work with 

Cons of FHA loans include:

• Mortgage insurance premiums: FHA loans require both upfront and monthly mortgage insurance premiums, regardless of down payment amount. 
• Primary residence restriction: FHA loans are only available for primary residences—you cannot use them to purchase investment properties or second homes. However, you can purchase a 2-4 unit property and live in one of the units while renting out the others. 
• Strict property standards: Homes must meet FHA minimum property requirements. Issues like chipped paint, roofing problems, or outdated wiring may delay closing or require repairs before approval.
• Loan limits: Each county has specific FHA loan caps that may restrict your purchasing power in high-cost areas.
• Limited property types: Some property types, including certain condominiums, co-ops, and manufactured homes, may not be eligible for FHA financing.
• Longer processing times: FHA loans often take longer to process due to additional property inspections and government oversight requirements.

Yes, you can still qualify for an FHA loan after bankruptcy. The program is built to give people a second chance at homeownership after financial hardship. 

Consider the following FHA bankruptcy guidelines:

• Chapter 7:
  • Eligible 2 years after discharge
  • Must show reestablished credit and no new major derogatory marks
• Chapter 13:
  • Eligible after 12 months of on-time payments
  • Court approval is required
  • Must continue making payments during the loan process
• Extenuating Circumstances:
  • Events like major medical issues may allow for exceptions, reviewed case by case.

Here’s an FHA loan document checklist to help you stay organized and ensure a smooth process: 

Employment & Income

• 2 years of full tax returns (all pages & schedules)
• 2 years of W-2s or 1099s
• Most recent pay stubs covering 30 days
• If self-employed: 2–3 years tax returns + current year Profit & Loss statement

Assets & Savings

• Last 2–3 months of bank statements (all pages)
• Retirement, 401(k), or investment account statements
• Gift letter (if receiving gift funds) + proof of deposit

Credit & Housing

• Most recent credit report (we pull this for you)
• Letter of explanation for any late payments or public records
• Verification of rent or 12 months of canceled rent checks
• If you cosigned on loans: 12 months proof you’re not making payments

Personal Information

• Government-issued photo ID (Driver’s License, Passport)
• Social Security Card or ITIN documentation
• Green Card or Work Authorization (if applicable)
• Divorce, alimony, or child support paperwork (if applicable)

If Refinancing or You Own Rental Property

• Mortgage statement
• Hazard (homeowner’s) insurance policy
• Property tax bill
• Lease agreements (for multi-unit or investment properties)
• Note & deed from current loan

FHA loan limits vary by county and are updated annually. For 2026, the baseline limit for a single-family home is $541,287 in most areas, while in high-cost counties the limit can go as high as $1,249,125. The maximum you can borrow depends on the FHA limit in your specific county and the number of units in the property.

Yes, FHA loan requirements allow you to use gift funds from family members, employers, or approved organizations for your entire FHA loan down payment and closing costs. The gift giver must provide a gift letter stating the funds don’t need to be repaid, and you’ll need to document the source of the gift funds.

Yes, you can purchase a duplex, triplex, or fourplex with an FHA loan, provided you live in one unit as your primary residence. This strategy allows you to generate rental income from the other units while meeting loan requirements for FHA occupancy. The property must still meet FHA standards and appraisal requirements.

Technically no—FHA loans cannot be used for pure investment properties. However, you can buy a multi-unit property (up to four units), live in one unit as your primary residence, and rent out the other units.

Yes, you can refinance from an FHA loan to a conventional loan once you meet conventional loan requirements. This typically requires at least 20% equity to avoid private mortgage insurance, good credit, and stable income. Refinancing can eliminate FHA mortgage insurance premiums and potentially secure a better FHA loan interest rate, depending on market conditions.

Some of the reasons you should consider working with Griffin Funding include: 

• HUD-approved FHA lender
• Available in 47 states + DC
• Localized advice on county loan limits and property types
• 1,000s of ⭐⭐⭐⭐⭐ reviews from happy homeowners
• Personalized support from licensed mortgage advisors