FHA Loans for No Closing Costs

FHA Loan Requirements

Minimum Credit Score

You will need at least a 580 FICO score to buy a home with an FHA loan. Many lenders, including CapCenter, impose a higher minimum credit score. CapCenter's minimum credit sore is 620. FHA applications with debt-to-income 55%+ require a minimum credit score of 640.

A tri-merge credit report is ordered for all borrowers to determine your credit score. This credit report provides credit scores as reported from all three major credit bureaus: Experian, Equifax, and TransUnion. The qualifying credit score for your refinance application is calculated as the lowest median score across all borrowers.

Maximum Debt-to-income (DTI)

Your DTI must be less than 60% to qualify for an FHA home loan. This means you can use up to 60% of your monthly income to pay off debt. Conventional loans have a stricter debt to income requirement of 45%.

Minimum Down Payment

FHA mortgages have a minimum down payment of 3.5%. Most Conventional loans require a down payment of at least 5%.

FHA Loan Limits

FHA mortgages are subject to a maximum loan amount requirement that varies by location. You will need to seek other loan options if you require a loan amount above the FHA imposed maximum loan limit.

Below, we've provided 2024 maximum loan amounts for common CapCenter markets. You can find the FHA maximum loan limit for your county on the HUD website.

FHA Loan Terms

FHA home loans are only available as Fixed-Rate mortgages. This means that your interest rate will not change for the entire life of the loan. CapCenter currently offers the following loan terms for FHA loans:

• 30 Year FHA Loan
• 15 Year FHA Loan

Mortgage Insurance Premium (MIP)

Upfront Mortgage Insurance Premium

FHA Loans require an upfront payment of mortgage insurance, assessed as 1.75% of your loan amount. You can finance upfront MIP into your loan amount or pay it in cash when you close. Most people elect to finance upfront MIP and avoid additional cash to close.

Monthly Mortgage Insurance Premium

FHA loans also require MIP payments with your monthly mortgage payment. MIP ranges from annual rates of 0.45% to 1.05% depending on your equity and loan term. Borrowers must pay Monthly MIP for at least 11 years and may have to continue paying it for the entire life of the loan.

FHA Closing Costs

CapCenter offers ZERO Closing Cost FHA loans. We cover all traditional closing costs for all loans and also cover recordation taxes / fees on refinances. For an FHA refinance in Virginia, we estimate average savings of around $4,000 when you use CapCenter. Check out our FHA Loan Calculator to understand how we calculate your savings.

When to Consider an FHA Loan

Many believe that a Conventional loan is always the best option if they qualify; this is not always the case. Sometimes FHA loans can have a lower rate since they avoid expensive credit score fees assessed on Conventional loans.

An FHA loan may be a great option for you if any of the following apply.

• You have a credit score below 700.
• You may require an FHA loan if you're working to pay off other debts, exceeding 45% of your monthly income.
• You cannot afford a 5% down payment.