20% planning comparison
$90,00020% of an illustrative $450,000 purchase.
FHA Loans
Explore FHA financing with a clear view of the down payment, mortgage insurance and property requirements.
Who should compare FHA financing
An FHA-insured mortgage can be worth comparing when a buyer has limited down-payment funds or a credit profile that calls for a different path from conventional financing. FHA is not limited to first-time buyers. The lender evaluates income, debts, credit history and the property together.
A smaller down payment can open the conversation
As little as 3.5% down for eligible FHA purchases
20
%
Eligible FHA option
$15,7503.5% of the same price, if the borrower and property qualify.
Plan beyond the down payment
+Closing costs, prepaid items, reserves where required, and monthly housing costs still matter.
Illustrative down-payment amounts only. The counter moves from 20% to a possible program minimum; it does not show a rate, discount or individual approval.
FHA insures mortgages made by approved lenders. Its minimum investment can be 3.5% with a qualifying decision credit score of at least 580; FHA permits 10% down for scores of 500–579. Lender requirements can be stricter. A score alone does not establish approval.
Smart home financing starts with strategy
Buying or refinancing? We compare options across our network of 150+ wholesale lenders, explain the trade-offs, and build a plan around your goals. Start with a pre-approval video conversation so you know what to expect before moving forward.
FHA terms: cash, insurance and the property
| Topic | What to plan for |
|---|---|
| Mortgage insurance | Most FHA forward loans carry 1.75% upfront MIP plus annual MIP paid monthly. Annual rates depend on loan details. Duration can be 11 years at initial LTV of 90% or less, or the mortgage term above 90%, under applicable current rules. |
| Income and DTI | Stable, eligible income and the overall underwriting result matter. Debt ratios and documentation depend on manual versus automated review and lender overlays. |
| Occupancy | Generally a primary residence, with occupancy required within 60 days and intent to continue at least a year, subject to permitted exceptions. |
| Appraisal and condition | An FHA appraisal checks value and minimum property requirements. It is not a home inspection; property conditions can require repairs or further evaluation. |
| Cash to close | Down payment is only one part. Compare actual closing costs, prepaid charges, gifts or eligible assistance and seller credits. |
FHA Streamline: fewer documents, still a full cost decision
Existing loan
FHAThe current loan must be FHA insured, current and meet seasoning/payment-history requirements.
Borrower benefit
CompareThe new loan must meet the net tangible benefit test. Review the payment, insurance, term and break-even—not just the rate.
Costs & cash
PlanClosing costs still apply and generally cannot be included in the new streamline principal. No cash-out; incidental cash is limited to $500.
Credit-qualifying and non-credit-qualifying paths exist. Neither promises that the lender will perform no credit or employment checks. An appraisal is not generally required for a qualifying streamline, but program and lender conditions still apply. Seasoning generally includes six payments, six full months since the first payment due date and at least 210 days from closing; our team checks the actual dates.
New mortgage insurance and any eligible upfront-premium refund credit need to be included in the comparison. A refund is not automatically cash paid to you. Review HUD’s Streamline overview, then send our team your current payment and loan goals.
FHA: plan beyond the down payment
What is an FHA loan?
An FHA loan is insured by the Federal Housing Administration and made by a participating lender. It can be useful for first-time buyers and repeat buyers who want a smaller down payment or need a different credit evaluation.
FHA rules allow 3.5% down with a qualifying credit score of at least 580, or 10% down at scores from 500 to 579; lenders may require more. FHA cash-out refinancing generally has an 80% maximum loan-to-value ratio, subject to the applicable rules. Mortgage insurance, property condition, income, debts and occupancy also matter.
Our team will compare the complete FHA and conventional costs for your situation, then help you use our FHA Mortgage Calculator to plan.
About FHA Loans
With a down payment as little as 3.5% for single-family and multifamily homes, this is a great option for minimizing the cash needed to buy a home with reasonable credit expectations and flexible income requirements.
They are the perfect mortgage solution for those who may not qualify for conventional financing or who, in doing so, would not qualify for a favorable rate yet still be able to obtain home financing, especially first-time home buyers.
Also available is a 203k Rehabilitation Loan, which allows for certain renovations that can be done after you close. Contact us for more details.
While not common, this program also allows for adjustable-rate mortgage options, similar to a Conventional Mortgage.
Down Payment Assistance
Some Colorado assistance programs may be available with an FHA first mortgage when the borrower, property, participating lender, and program rules align. Assistance can take different forms, including a grant or a second mortgage with its own repayment terms.
Explore our Colorado down payment assistance guide (also known as DPA), then compare the full first-mortgage cost, assistance terms, and current program requirements before planning an offer.
Talk with our team today to review your best options.
FHA Loans and Credit
A prior bankruptcy does not automatically end your path to an FHA loan. The type of bankruptcy, discharge or dismissal date, payment history and circumstances matter. Chapter 7 and Chapter 13 follow different rules; court permission and documented repayment may be relevant for Chapter 13.
Our team can review the dates, current credit and documentation before you make an offer. We also compare alternative home financing when the timing or income profile does not fit an FHA option. Availability and waiting periods are program-specific.
Federal Housing Administration
Federal Housing Administration was established in 1934 after the great depression to improve housing standards and to provide an adequate home financing system with mortgage insurance to protect against borrower defaults. Now, families that may have otherwise been excluded from the housing market could finally buy their dream home.
This program was created in response to the rash of foreclosures and defaults that happened in the 1930s; to provide mortgage lenders with adequate insurance; and to help stimulate the housing market by making housing more accessible and affordable.
FHA does not originate mortgages; the lenders do that for them; they simply insure against a homebuyer defaulting. This allows banks to continuously issue financing without much risk or capital requirements.
Cash to close
Plan for down payment, closing costs, prepaid expenses and reserves where applicable. Start your financing plan →
Mortgage insurance
Compare upfront and annual mortgage insurance alongside the rate. Start your financing plan →
Property condition
Review appraisal standards and repairs early in the contract timeline. Start your financing plan →
FHA purchase planning
The minimum down payment can be 3.5% for eligible borrowers with the applicable credit profile. Lender requirements can be more restrictive than FHA minimums. Gifts or assistance may be permitted with documentation. FHA financing generally requires a primary residence and applicable occupancy.
FHA refinance choices
Ask about a rate-and-term refinance, cash-out refinance or streamline refinance when applicable. A streamline is not a cash-out loan, and reduced documentation does not remove all requirements. Cash-out limits and seasoning rules need a transaction-specific review.
The right loan begins with your goals
Tell us how you plan to use the home, what monthly payment feels comfortable and how long you expect to keep the financing. We compare options across lenders, explain the costs and help you choose a strategy with a clear next step.
Our pre-approval video call gives you time to ask questions, understand the trade-offs and coordinate your financing before an offer or refinance decision.
Budget beyond the down payment
FHA financing includes upfront and annual mortgage insurance. Compare the total monthly payment and cash to close with a conventional option rather than deciding from the down payment alone. The property must meet applicable appraisal and condition standards.
Plan the purchase or refinance
Discuss occupancy, available funds, gifts if applicable, repairs and the appraisal timeline. Some borrowers may also explore Colorado down payment assistance; each administrator has its own lender and first-mortgage pairing rules.
Explore Mortgage Calculators
Compare purchase, refinance and affordability scenarios, then let our team help turn the estimate into a financing plan.
FHA seller credits: up to 6% for eligible costs
| Situation | Credit planning rule |
|---|---|
| Interested-party contribution limit | Up to 6% of sales price |
| Example: $450,000 sales price | $27,000 percentage ceiling; actual eligible costs also limit usable credit |
FHA’s interested-party contribution rule uses sales price. Contributions can cover eligible origination charges, closing costs, prepaid items and discount points. Excess contributions or inducements can affect the value used for underwriting.
Seller credits are negotiated, not guaranteed. Eligible credits may cover approved closing costs, prepaid items or points; they do not replace a required down payment or become unrestricted cash back. A percentage ceiling is not a promise that every dollar can be used. Repair arrangements and price changes need documented approval, not an informal workaround.
Questions worth asking
No. FHA financing can be considered by repeat buyers who meet the applicable occupancy and lending requirements.
Compare cash to close, total monthly payment, mortgage insurance, property requirements and the time you expect to keep the loan.
No. The appraisal supports lending decisions; an independent home inspection serves a different purpose.
FHA may allow 3.5% down for an eligible borrower with qualifying credit; lower credit scores can require more, and lender requirements can differ. We will review your complete profile and compare FHA with conventional financing before you choose.
FHA insurance duration depends on the loan terms and origination rules; it does not follow conventional PMI cancellation rules. Our team can explain your current loan and compare refinancing costs with any potential benefit.
More resources for your financing decision
Explore these related guides and resources from your original loan page.
What our clients say
Read more about Paul Cederholm and our team on Google Business Page and Experience.com.
Plan your next move
Bring your goals and a property address if you have one. Paul Cederholm, mortgage expert and real estate financing strategist, can help you compare the financing choices and plan your next step.
Ready to begin? Start your loan application. Prefer a direct conversation? Call 303-931-6798.
*Information, scenarios, and calculations are for educational and illustrative purposes only—not a loan offer, a commitment to lend, a rate quote or an approval. Programs, costs and qualification requirements depend on the borrower, property, selected lender and current guidelines. Examples are not guaranteed results. Our team can review the details for your situation.