FHA Home Loans Made Simple

What Is an FHA Loan?

FHA loans are government-backed mortgages that are designed to help more people qualify for homeownership. An FHA loan program can be a great option for first-time buyers or those with lower credit scores or limited savings. 

Key features of FHA loans include: 

• Down payments as low as 3.5% 
• Flexible credit requirements 
• FHA-insured mortgage 
• Mandatory mortgage insurance premiums (MIP) 
• No prepayment penalties 

The government does not issue FHA loans; they’re insured by the Federal Housing Administration and offered through private lenders like Griffin Funding. This government-backed insurance gives lenders added security, making it easier to approve buyers with lower credit scores or smaller down payments. 

Just like the Department of Veterans Affairs backs VA loans, these FHA guaranteed loans are designed to expand access to affordable homeownership for a wide range of buyers.

Griffin Funding is now HUD-approved to underwrite FHA loans directly, helping more buyers across the U.S. achieve their homeownership goals with confidence.

Not sure if an FHA loan is the right fit? You can also compare FHA loans vs. VA loans or explore CALHFA loan programs if you’re buying in California. Griffin Funding offers a variety of mortgage options to meet your needs.

What is the FHA?

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.

FHA Loans vs. Conventional Home Loans

	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

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.

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.

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 Loan Rates

FHA loan rates are often lower than conventional mortgage rates, making them an attractive option for buyers who want to maximize affordability. However, 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 

Griffin Funding offers live FHA mortgage rates that are updated daily to reflect the latest trends. Here are today’s FHA loan rates:

Want to know what rate you qualify for? Our team can provide a personalized quote and walk you through your best loan options in just minutes.

Types of FHA Loans

FHA loans come in several forms, each tailored to different borrower needs, from first-time homebuyers to retirees. Below are the most common types of FHA loans offered through HUD, listed by their official section numbers, including purchase, renovation, refinance, and reverse mortgage programs.

1. FHA 203(b) – Standard Home Purchase Loan

The FHA 203(b) is the most common FHA loan and is designed for purchasing or refinancing a primary residence. It offers a low 3.5% down payment (with a credit score of 580 or above), flexible credit guidelines, and is available for 1–4 unit properties. Most homebuyers using FHA are using this program.            Learn more about FHA purchase loans.

2. FHA 203(k) – Renovation Loan

The FHA 203(k) allows borrowers to finance both the purchase and renovation of a home with one loan. This program is ideal for buying fixer-uppers or updating an existing property. Griffin Funding offers both:

• Limited 203(k) – for cosmetic upgrades and small projects

• Standard 203(k) – for structural improvements or major renovations
  Learn more about FHA 203(k) loans

3. FHA HECM – Home Equity Conversion Mortgage (Reverse Mortgage)

Also known as an FHA reverse mortgage, the HECM allows homeowners age 62 or older to tap into their home’s equity and receive tax-free funds with no monthly mortgage payments. The loan is repaid when the home is sold or the borrower no longer occupies the property.
Explore Reverse Mortgages

4. FHA Section 245(a) – Graduated Payment Mortgage

This program is for borrowers who expect their income to grow steadily over time. It starts with lower payments that gradually increase, helping make homeownership more affordable in the early years.

5. FHA Streamline Refinance (part of 203(b) family)

The FHA Streamline Refinance lets existing FHA borrowers refinance their loan without income verification or a new appraisal. It’s one of the fastest and most affordable ways to reduce your interest rate and monthly payment.
Learn more about FHA Streamline Refinancing

6. FHA Cash-Out Refinance (Part of 203(b) family)

This option allows you to tap into your home equity and receive cash back for any purpose. With the backing of the FHA, it’s easier to qualify for cash-out refinancing, even with lower credit or higher debt-to-income ratios.
Learn more about FHA Cashout Refinancing

7. FHA 234(c) – Condominium Loans

The FHA 234(c) program is specifically for financing approved condominium units. Buyers can enjoy the same low down payment and flexible credit terms as a standard FHA loan, as long as the condo is on the FHA-approved list.

8. FHA 203(h) – Disaster Victim Loan

The FHA 203(h) program helps homeowners and renters whose residences were destroyed in a federally declared disaster. It offers 100% financing with no down payment requirement, making it easier to recover and rebuild.

9. FHA Energy Efficient Mortgage (EEM)

The FHA EEM allows borrowers to finance energy-efficient upgrades—like new windows, solar panels, insulation, or HVAC systems, into their 203(b) or 203(k) loan. This helps reduce future utility costs while supporting sustainability.

10. FHA 203(b) with Earned Equity Program (EEP) – Tribal Lease-to-Own Structure

The Earned Equity Program (EEP) is a specialized use of the FHA 203(b) loan in partnership with Native American tribes or housing authorities. Under this program, the tribe purchases a home using an FHA-insured loan and leases it to a tenant (the eventual buyer), who earns equity over time through monthly payments.

The tenant can assume the FHA mortgage at any time or purchase the home outright with cash, without penalty. A recorded agreement protects the tenant’s right to ownership and equity. While the tribe’s underlying mortgage is a standard 30-year fixed FHA loan, the tenant’s payment is amortized over 40 years with a 10-year lease term, renewable for another 5 years if needed.

This program expands access to homeownership for individuals who may not yet qualify for financing themselves, offering time to build income, credit, or savings while securing a path to ownership.

Learn more about the FHA Earned Equity Program

Not sure which FHA loan is right for you? Our team can walk you through your options based on your goals, property type, and financial profile.

Pros and Cons of FHA Loans 

The following FHA loans pros and cons can help you make an informed decision about your home financing options.

Pros of FHA loans

• Low down payment: FHA loans allow qualified buyers to put down as little as 3.5%.
• Flexible credit requirements: Borrowers with credit scores as low as 580 can qualify for the minimum down payment, while those with scores between 500-579 may still qualify with 10% down.
• Competitive interest rates: FHA loans typically offer attractive interest rates that are often lower than conventional loan options.
• Flexible underwriting standards: Lenders can be more lenient with debt-to-income ratios, employment gaps, and other financial circumstances.
• Assumable loans: FHA loans can be transferred to future buyers, which can be a valuable selling point if interest rates rise after you purchase your home.
• Down payment gift allowances: Borrowers can use gift funds from family members, employers, or approved organizations for their entire down payment and closing costs.

Cons of FHA Loans

• 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.
• 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.

Who Can Qualify for an FHA Loan?

FHA loans are designed to make homeownership more accessible, especially for borrowers who may not meet conventional loan requirements. While the FHA sets general eligibility guidelines, loans are issued by HUD-approved private lenders like Griffin Funding. Here’s what you typically need to qualify:

Basic FHA Loan Requirements:

• Credit Score:

  • 580+ for a 3.5% down payment

  • 500–579 possible with 10% down and compensating factors

• Employment History:

  • 2 years of verifiable income (W-2s, tax returns, or self-employed docs)

• Debt-to-Income (DTI) Ratio:

  • Front-end: ≤ 31% (housing only)

  • Back-end: ≤ 43% (total monthly debts)

  • Can go higher with AUS (automated underwriting) approval

• Property Use:

  • Must be a primary residence

  • Must pass an FHA appraisal and inspection

• Bankruptcy/Foreclosure Wait Periods:

  • 2 years after Chapter 7

  • 1 year into Chapter 13 repayment with trustee approval

  • 3 years after foreclosure (in most cases)

As a HUD-approved lender, we offer flexible underwriting and personalized guidance to help more buyers qualify, even those with past credit challenges, limited savings, or non-traditional income sources. Many of our clients are also exploring first-time home buyer programs to maximize purchasing power and take advantage of additional benefits.

Can You Get an FHA Loan After Bankruptcy?

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.

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.

We understand life happens. Our team can help you navigate FHA guidelines, rebuild eligibility, and explore alternative options if needed.

What Documents Are Needed for an FHA Loan?

To get approved for an FHA loan, you’ll need to provide documents that verify your income, credit, assets, and identity. Here’s a 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

Our team will guide you through gathering all required documentation, so you don’t have to worry about missing a thing. We’ll also help verify your credit, calculate income, and submit your application faster.

How Big of an FHA Loan Can I Afford?

Your FHA loan amount depends on your income, debt, and location. Here’s how lenders calculate what you can afford.

FHA Loan Affordability Guidelines

Housing Costs (Front-End DTI):

• Your monthly housing expenses, mortgage principal, interest, taxes, insurance, and HOA (PITI)—should generally be no more than 31% of your gross monthly income.

• Example:
  If you earn $5,000/month → $5,000 x 0.31 = $1,550 max PITI

Total Debt (Back-End DTI):

• Your total monthly debt (PITI + car loans, credit cards, student loans, etc.) should be no more than 43% of your gross income.

• Example:
  $5,000 x 0.43 = $2,150 total debt limit
  If your PITI is $1,550 → $600 allowed for other monthly debts

Automated Underwriting Exceptions:

• With strong credit or reserves, AUS (DU/LPA) may approve higher ratios:

  • Up to 45–47% front-end

  • Up to 56.9% back-end
    (Case by case)

2025 FHA Loan Limits (National Low-Cost Areas):

• For 1-unit properties, the base loan limit is $524,225

• High-cost areas may qualify for higher limits
  Check FHA loan limits by county

Want a fast, personalized estimate of your FHA budget? Our loan advisors can help you calculate your max loan amount based on your income, credit, and local limits.

Where Does Griffin Funding Offer FHA Loans?

Griffin Funding proudly offers FHA loans in 47 states and Washington, D.C. Whether you’re buying your first home, upgrading, refinancing, or recovering from credit challenges, our team can help you secure a government-backed loan that fits your needs and location.

Click your state below to view local guidelines, loan limits, and eligibility information:

We are HUD-approved to underwrite FHA loans directly, giving you faster approvals and expert guidance from start to finish.

Why Choose Griffin Funding?

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

Apply for an FHA Loan with Griffin Funding

At Griffin Funding, we make FHA home loans simple, supportive, and stress-free. Whether you’re buying your first home or rebuilding your financial future, we’ll guide you every step of the way, with speed, clarity, and care.

Reach out to learn more about the FHA loan programs we offer or get started online today.