Key Elements of FHA Loans
Here are key aspects of FHA loans you should know!
FHA loans are insured by the Federal Housing Authority, a division of the Department of Housing and Urban Development. This Federally insured program exists to extend more opportunities for affordable home ownership to low to moderate income families, as well as borrowers who may have “less than perfect” credit histories.
An FHA loan includes an Upfront or One-Time Mortgage Insurance Premium (MIP) which is added to the Base Loan amount to determine the Final Loan Amount. The Upfront MIP for all purchases and refinances (except the FHASecure) is 1.75% regardless of LTV.
Additionally, there is a Monthly Mortgage Insurance Premium of 0.25%, 0.50% or 0.55% included in the PITI. Mortgage Insurance, both Upfront and Monthly is a requirement on every FHA loan, regardless of LTV.*
(*The sole exception to this statement is when the loan is a 15 yr term with LTV of 89.99% or less – in which case, there is no monthly MIP.)
The maximum Base Loan is determined by County and number of units. FHA loans are available for 1-4 unit, owner occupied properties, including PUD’s and FHA Approved Condominiums.
For Example:
| County |
1 Units |
2 Units |
3 Units |
4 Units |
| Salt Lake |
$362,790 |
$464,449 |
$561,411 |
$656,250 |
| Utah |
$232,305 |
$261,649 |
$317,892 |
$384,936 |
| Weber |
$263,388 |
$296,658 |
$360,425 |
$415,875 |
| Davis |
$263,388 |
$296,658 |
$360,425 |
$415,875 |
| Tooele |
$362,790 |
$464,449 |
$561,411 |
$656,250 |
Maximum Base Loan amounts for each State and County can be found on the HUD website by folloing this link: https://entp.hud.gov/idapp/html/hicostlook.cfm.
The maximum Base Loan, per transaction, is determined by using the applicable LTV calculation determined by the Sales Price or Property Value, whichever is less. In most cases, the maximum Base Loan LTV will be 97.00%. If the loan applicant is paying for all of the loan closing costs, the Base Loan LTV may exceed 97.00%, according to the chart below:
Low Closing Cost States
98.75% LTV - Property Value $50,000 or less
97.65 % LTV - Property Value > $50,000-125,000
97.15% LTV - Property Value over $125,000
High Closing Cost States
98.75% LTV - Property Value $50,000 or less
97.75% LTV - Property value over $50,000 |
**See the Mortgagee_Letter_2008-16 for the premium matrix and more details. **
Learn the benefits of FHA loans.
Learn about becoming FHA approved.
Direct Mortgage Wholesale offers FHA loans for both purchase and refinance, fixed or ARM.
View a list of our FHA and other loan programs.
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