The Federal Housing Administration (FHA) was established back in 1934 with a simple goal, to help more Americans purchase new homes. As with any governmental agency, the FHA Mortgage Loan options available and the rules to apply can be very complicated. FHA Home Loans Arizona programs can also be challenging to comprehend.
FHA Home Loans Arizona FAQ
The mortgage insurance cancellation rules were last changed on 6/3/2013:
A FHA loan with less than 10% down will require the monthly mortgage insurance premiums to be paid through the entire loan term. Borrowers will not be eligible to have the mortgage insurance removed no matter how much time passes or what the loan to value is (the rule in the past used to require 78% loan to value and 5 years minimum).
A FHA loan with 10% or more down will be eligible to have the monthly mortgage insurance premiums removed after the following two conditions have been met: 1-after 11 years have passed with on time payments & 2-when the principal loan balance reaches 78% of the value of the home at the time of purchase.
Annual Arizona FHA Mortgage Insurance Premiums after 3/20/2023:
15-Year Fixed with down payment more than 10% , the MIP is .15%
15-Year Fixed with down payment less than 10% , the MIP is .40%
30 and 20 Year Fixed w/ down payment more than 5% , the MIP is .50%
30 and 20 Year Fixed w/ down payment less than 5% , the MIP is .55%
Note: Upfront Mortgage Insurance premiums for all FHA transactions increased from 1% to 1.75%
What is the minimum down payment for FHA loans? The minimum down payment is 3.5%.
Are Gifts allowed on FHA loans? Yes, borrowers can receive all their down payment, closing costs and prepaid taxes and insurance from a gift.
What is the credit score I’ll need to apply? In the state of Arizona, most institutions will be looking for a credit score of 620 or better. In some cases, we can do FHA mortgages for borrowers with a credit score down to 620. Please contact us for details.
How do I know if the house I’m looking to buy allows me to apply for an Arizona FHA Mortgage?
All Single Family Residences, Town-homes, or Patio homes will be eligible for FHA financing
Condominiums are a different matter. Since 2011 virtually all condos in Arizona have been ineligible for FHA loans. Why? The reason has to do with the way FHA approves and manages the approved condo list. For decades FHA managed the condo approval list on their own. Since 2011 they have handed the responsibility of the approval process to banks. Banks have been reluctant to approve condominium projects and as a result, project approvals have expired. It is extremely rare to find a condominium project that is approved and eligible for FHA financing.
What is the maximum loan to value for a FHA cash-out refinance? You can receive cash-out on a FHA refinance up to 80% of the appraised value.
What is the maximum seller contribution/concession towards a FHA buyer’s closing costs and prepaids? Sellers can contribute up to 6% of the sales price towards a buyers closing costs and prepaids.
What is the FHA loan limit for Maricopa county? See below for Maricopa county FHA loan limit.
What are the FHA loan limits Arizona for other counties? Below is a grid of the latest FHA loan limits in Arizona for all Arizona Counties. Notice how Coconino County’s loan limit is much larger than all the others.
2024 FHA Loan Limits by Arizona County
|County Name||1 Unit||2 Unit||3 Unit||4 Unit|
Arizona FHA Mortgage Loan Types
Your Arizona mortgage broker will be familiar with the types of loans available, but you will also want to be familiar with your options before you begin.
First – you must be aware that FHA mortgage loans have an up-front mortgage insurance premium and an annual mortgage insurance premium. The insurance costs and annual percentages will vary based on the length of the loan and the amount of your down payment so be sure to ask your mortgage advisor! Do not be surprised by this.
It’s also important that you understand “why” this is required. Very simply, FHA Mortgage Programs provide an option for those that may not be able to qualify for a conventional loan. But this means that financial institutions are taking a little more risk so the insurance is designed to act as a form of protection for the banks and lenders.
When discussing the available Arizona FHA Mortgage Programs with your advisor, you will want to work to determine which of the four Single Family Housing programs will be right for you:
Section 203(b): Most Arizona FHA mortgage loans fall under this section. It can be used to finance from ONE to FOUR housing units. Mortgage terms can be ADJUSTED to accommodate the needs of the applicant. LOW DOWN PAYMENT: only 3.5% is required. There are also various GIFT OPTIONS for down payments that are acceptable.
Section 234(c): This FHA Mortgage Loan is used for CONDOMINIUMS. The same credit requirements for a Section 203(b) apply to this as well. New 2010 rules require that this type of application be submitted via HRAP/DELRAP. Your mortgage advisor will be aware of this, but you can look for Arizona approved condos.
Section 203(k): This program allows a borrower to finance the cost to REPAIR/REMODEL their home. One mortgage loan will be used for the acquisition AND upgrade of units. Up to FOUR housing units are eligible but consult your preferred bank on other criteria. FHA Mortgage Consultants may be required on certain 203(k) loans.
HECM – Reverse Mortgages: This type provides applicants access to the equity in their housing units. Several PAYMENT METHODS are available such as; lump sum, installments, line of credit or a mix of those three options. Only applicants of AGE 62 or above can qualify.
In addition to this list, FHA has developed new options such as the Streamlined Refinance and the “Make Home Affordable Program” that are meant to help alter and refinance current mortgages.