Since it was introduced in the 1930s, the FHA loan program has helped countless people afford their homes by working with lending companies to make loans more affordable. Through this program, the FHA will insure the loan that a lender offers to a borrower, thus making it easier for the borrower to qualify and receive their loan, as well as making it more affordable for them. There are several different types of FHA loans, and if you qualify for an FHA loan you may find that you get some excellent terms.
One thing that often confuses people is that not all properties actually qualify for FHA financing. Understanding what the eligible properties with FHA financing are is a key to figuring out if these loans are right for you. After all, if the home you’re considering isn’t eligible, then there is little need in pursuing FHA loans.
Luckily, a wide variety of different properties are eligible for FHA financing, and the majority of people who are interested in these types of government back loans will be able to secure one as long as they meet other requirements. Here’s a quick look at the different homes and properties that are eligible under FHA guidelines:
- Detached houses
- Semi-detached houses
- Row houses
- Condos within approved condo projects
- 1 to 4 unit residences
- Homes inside planned urban developments, also called PUDs
- Double-wide manufactured homes
- Single-wide manufactured homes
- 3 to 4 unit homes
- Modular homes
In other words, almost any type of home that you could choose to purchase will likely fall within the eligibility requirements of FHA financing. The main thing to remember is that the home you’re financing through an FHA loan must be your primary residence. You can’t use FHA loans to finance rental properties, vacation homes, or second homes.
However, there are a few different guidelines for certain types of homes that you’ll need to consider. In the case of 3 and 4 unit properties which will obviously be rented out, you can still qualify for FHA backing as long as you can show that your net rental income will cover your mortgage payment. You’ll also have to qualify based on other requirements like income, credit scores, and other factors plus you’ll have to have at least 3 months’ worth of cash on hand in order to handle mortgage payments. This helps offset the risk of not finding renters.
Also, if you’re planning on purchasing manufactured homes, the home must be constructed after June 15, 1976. Additionally, the home’s living space must be more than 400 square feet and it must not be on wheels – the manufactured home must be attached to a slab foundation and connected to utilities.
There are other requirements as well depending on the type of home that you want to buy, including requirements for rural properties, but most properties will fall within the guidelines. As long as you can meet the other requirements of things like credit score, down payment, and income, you’ll be able to purchase your new home with help from FHA loans.