Have you ever wondered what the difference is between the various mortgage loan types? Or were you unaware that there are many different types of loans meant to address specific borrower needs? Just as no two borrowers are exactly alike, no two loan programs are set up precisely the same way.

One of the most common loan types available is the FHA loan.

What is an FHA loan?

FHA stands for Federal Housing Administration. This loan is named after the government agency that insures this product. One reason FHA loans are so popular, especially with first-time buyers, is the low down payment requirement of as little as 3.5 percent. In order to protect the lender from borrower default, FHA requires the borrower to pay 1.75 percent mortgage insurance up front and monthly mortgage insurance based on loan-to-value and the term of loan. FHA is the largest insurer of residential mortgages in the world.

FHA Guidelines and Requirements

As with any loan product, there are a variety of factors that must be met when applying for an FHA loan. A few of those requirements are as follows:

  • Mortgage insurance – FHA requires 1.75 percent up front mortgage insurance that is financed into the loan and monthly mortgage insurance based on loan-to-value and term of the loan.
  • Loan Limits – FHA maintains a maximum amount it will insure, which is known as the FHA lending limit. This amount varies by county and is updated annually.
  • Debt Ratios – In order to prevent borrowers from taking on a loan they cannot afford, FHA has set certain debt-to-income ratios that must be met in order to qualify.
  • Credit – FHA has certain credit guidelines that help determine whether or not a borrower will qualify. For example, a borrower with a minimum FICO score of 580 may be eligible to purchase a home with as little as 3.5 percent down.

Is an FHA the right loan for me?

So how do you know which type of loan is right for you? That’s where it helps to have a knowledgeable loan officer by your side. A good loan officer will listen to your needs, evaluate your specific situation, educate you on different loan products and help you select the right loan for you.


Castle & Cooke Mortgage, LLC® (NMLS #1251) is a leading independent mortgage lender headquartered in Draper, Utah, with locations across the United States.

Restrictions may apply. Not all who apply will qualify. Program qualifications & offerings are subject to change at any time. Equal Housing Lender. Castle & Cooke Mortgage, LLC is licensed in AL, AR, AZ, CA, CO, CT, FL, GA, HI, ID, IL, IN, IA, KY, MD, MI, MS, MO, NE, NV, NM, NC, ND, OH, OK, OR, TN, TX, UT, WA, WI and WY. Castle & Cooke Mortgage, LLC is licensed by the Arizona Department of Financial Institutions Arizona Mortgage Banker: BK-0908287. Castle & Cooke Mortgage, LLC is licensed by the Department of Business Oversight, under the California Residential Mortgage Lending Act License #4130740. In Colorado, Castle & Cooke Mortgage, LLC is regulated by the Division of Real Estate. Georgia Residential Mortgage Licensee, License #43759. Illinois Residential Mortgage Licensee. Oregon Mortgage Lending License #ML-4090. Licensed by the Mississippi Department of Banker and Consumer Finance.

Information contained in this this Blog does not constitute legal, financial, or other professional advice or services and should not be used as a substitute for professional advice. The purpose of the Blog is to provide Castle & Cooke Mortgage, LLC’s opinions and general guidance on certain matters related to mortgages. The reader accepts full responsibility for use of the information contained herein.