FHA Loans

The Federal Housing Administration was established as part of the National Housing Act of 1934 and later became part of the Department of Housing and Urban Development (HUD) in 1965. The primary goals of the FHA are to improve the housing market and to protect lenders in the event of borrower default. This is achieved by insuring mortgages that are offered by FHA approved lenders. The FHA has grown to become the largest insurer of mortgages in the world, having insured over 34 million mortgages since the early 1930s. American Pacific Mortgage offers great rates and flexible financing options on FHA Loans throughout Happy Valley, Portland, Damascus, Boring, Gresham, and the surrounding Oregon communities.

Borrowers can utilize FHA loans for a variety of needs including the purchase of a new home, financing special renovation projects, and reverse mortgages. Both cash-out refinance and streamline refinance options are available to those individuals who are currently financing their home with an FHA loan.

FHA loans are a popular choice among first-time homebuyers given their relaxed credit requirements and low down payment options. Borrowers could potentially qualify for an FHA loan with a down payment of 3.5% and a credit score as low as 580. If a borrower does not have the cash on hand to meet the down payment requirement, family members can even offer the money as a gift. Let’s take a closer look at what is needed to qualify for an FHA loan.

Oregon FHA Loan Requirements

  • Credit Score – In most cases, 580 is the minimum credit score needed. Borrowers with a credit score between 500 – 579 may be able to qualify with a 10 percent down payment.
  • Income Requirements – An applicant’s debt-to-income ratio must be 43 percent or less. A debt-to-income ratio as high as 50 percent may be approved in special circumstances.
  • Down Payment – A down payment of at least 3.5 percent of the purchase price must be made. As mentioned above, borrowers who do not meet the minimum credit score requirements may be required to make a larger down payment.
  • Property Requirements – All properties must meet certain safety, security, and soundness (structural integrity) requirements set forth by the FHA. 

Two different mortgage insurance premiums (MIP) are required with all Oregon FHA loans. The first MIP is an up-front premium equal to 1.75 percent of the purchase price of the home. The FHA automatically adds the upfront mortgage insurance premium to your loan balance. This increase in your total loan amount does not affect the calculation of your loan-to-value (LTV) ratio. The second premium due is an annual insurance premium. While it is an annual calculation, this premium will be paid on a monthly basis. This particular MIP will be based on a number of factors including the total loan amount, LTV ratio, and the length of the mortgage. The annual insurance premium will fall between .70 percent and 1.05 percent of the borrowed amount.

Oregon FHA Loan Limits by County.

County Single-Family Duplex Triplex Fourplex
Clackamas $368,000 $471,100 $569,450 $707,700
Multnomah $368,000 $471,100 $569,450 $707,700

At American Pacific Mortgage, we are committed to helping our clients throughout Happy Valley, Portland, Damascus, Boring, and Gresham with all of their FHA loan needs. Whether you are purchasing your very first home, or looking to refinance an FHA loan, we can help. Contact us today with any questions you may have on FHA loans or to begin the pre-qualification process!