What is an FHA Loan? | 203(k) loansFHA streamline refinance | 

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We offer both VA and FHA Loans.

While we are an approved lender, we are not part of HUD, FHA, The United States Government, or the Department of Veteran Affairs.

We are not acting on behalf of, or under the direction of HUD/FHA or the Federal Government.

FHA and VA do not lend directly to the public, only through approved lending institutions like Mortgages Unlimited.

You've heard the name before, but did you know that FHA financing is one of the most popular ways to become a homeowner or refinance an existing mortgage. FHA's mortgage insurance programs help low and moderate income families become homeowners by lowering some of the costs of their mortgage loans.

FHA mortgage insurance also encourages mortgage companies to make loans to otherwise creditworthy borrowers and projects that might not be able to meet conventional underwriting requirements, by protecting the mortgage company against loan default on mortgages for properties that meet certain minimum requirements--including manufactured homes, single-family and multifamily properties.

We are a top provider of FHA Home Loans in Minnesota, Wisconsin. 
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FHA LOANS vs. Conventional Financing

First Time Buyers LOVE FHA for the low down payment!
Although there are similarities between FHA and Conventional mortgage loans there are also some big differences. While interest rates are similar, credit guidelines are different. FHA allows for borrowers with less than perfect credit to receive the same interest rate as a borrower with unblemished credit. Low down payment conventional financing with just 5% down is much harder to qualify for these days. Minimum credit scores are higher on conventional loans, but mortgage insurance is lower than on an FHA Loan.

Most applicants are inundated with a variety of terms describing mortgages that are available on the market. The most popular include, Conforming, FHA, VA, HARP, USDA, conventional and jumbo.

FHA loans were created by the Federal Government to provide affordable housing financing for qualified borrowers. FHA insures  the loan, eliminating much of the actual lender's risk. The borrower pays a small upfront insurance premium, called MIP, which is added to the loan amount. The amount the borrower pays for this monthly mortgage insurance premium depending on down payment, and term. For most people, buying a home with a 30-yr fixed, it is 1.75%.

List of Minnesota First Time Home Buyer Programs

As with every mortgage loan, there are also closing costs which need to be paid. There are plenty of options over how and who pays them. Most often, these closing costs are financed into the loan amount by having the seller pay them. Seller paid closing costs really is simply a fancy term by which you are allowed to "roll" your closing costs into the loan, and pay them over the life of the loan, versus having to come up with the money today out of pocket.

Borrowers must provide proof of sufficient income to show ability to pay the mortgage. FHA guidelines are more relaxed, such as; a bankruptcy that was discharged at least 2 years ago, and a foreclosure was at least 3-years ago.

Maximum Loan Amounts Vary By County and State. Find out your limit with our FREE

LOAN LIMIT Lookup Tool

FHA and Conforming Loan Limit Lookup Tool


FHA home loan down payment requirements can be low. In contrast to conventional mortgage products, which frequently require down payments of 5-10 percent or more of the purchase price of the home, single-family mortgages insured by FHA make it possible to reduce down payments to as little as 3.50% percent.

FHA closing costs can be financed, up to 6% of the purchase price. With most conventional loans, the maximum is just 3%. Typically borrower must pay, at the time of purchase, closing costs (the many fees and charges associated with buying a home). This program allows the borrower to finance many of these charges, thus reducing the up-front cost of buying a home. FHA mortgage insurance is not free: borrowers pay an up-front insurance premium (which may be financed) at the time of purchase, as well as monthly premiums that are not financed, but instead are added to the regular mortgage payment.

Some fees are limited. FHA rules impose limits on some of the fees that mortgage companies may charge in making a loan. For example, the loan origination fee charged by the mortgage company for the administrative cost of processing the loan may not exceed one percent of the amount of the mortgage.

HUD FHA Loan Limits. Limits on the loan amount. To make sure that its programs serve low and moderate-income people, FHA sets limits on the dollar value of the mortgage loan. It is always changing, and does vary depending on which county the property is located. Use our FREE Loan Limit Lookup Tool to find out the limits in your area.

Fannie Mae & Freddie Mac loans are conventional loans made at the risk of the lender without benefit of any government guarantee or government insurance. A conventional loan with an LTV (loan to value ratio) of greater than 80% requires primary mortgage insurance, which can be paid monthly. The borrower must (usually) have 5% of his/her own funds for the down payment. There are still some 3% down conventional loans, but they are not available everywhere, and have stricker guidelines. 

Requirements of a conventional loan applicant include excellent credit, job stability with sufficient income, a sizable down payment, and low debt to income ratios. Borrowers who meet Fannie Mae or Freddie Mac conventional guidelines are rewarded with an interest rate only slightly lower than an FHA interest rate.

FHA Mortgage Insurance. Mortgage insurance is required under all programs where the borrower does not put at least 20% down payment. Conventional loans are able to eliminate mortgage insurance when you reach 80% loan-to-value (20% equity). FHA mortgage insurance is eliminated when you get to 78% loan-to-value (22% equity) by making payments only. Appreciate counts on conventional loans, but not on FHA loans.

The FHA Streamline Refinance

If you currently have an FHA mortgage you may be eligible for one of the simplest money saving refinances available today. The FHA Streamline Refinance allows existing FHA borrowers to reduce their interest rate without having to jump through as many hoops.

For example, there is a no appraisal option available, and closing costs can be rolled into the new loan, so most people can get near zero out of pocket costs.

How easy is that? Apply online for an FHA Streamline Refinance

FHA has permitted streamline refinances on insured mortgages since the early 1980's. The streamline refers only to the amount of documentation and underwriting that needs to be performed by the mortgage company, and does not mean that there are no costs involved in the transaction.

The basic requirements of a streamline refinance are:

  • Borrower's original loan must already be an FHA insured loan.
  • The refinance must lower the principal and interest payments of the previous mortgage payment by 5% or more.
  • No cash may be taken out on mortgages refinanced using the streamline refinance process.
  • The mortgage to be refinanced can not be delinquent. The mortgage must have been paid as agreed for the last twelve (12) months and must be up to date at the time of refinancing.
  • Borrower must have had the FHA mortgage for at least 6 months.
  • Borrower cannot receive any cash back.
  • No income or employment verification - No pay stubs or W-2 forms required for the program, but some states (like MN require documentation).
  • Appraisal only required if rolling in the closing costs.
  • Streamlines without an appraisal are limited to the unpaid principal balance, minus any refund credit of the mortgage insurance premium, plus the new upfront MIP if it is to be financed in the mortgage.
  • Any other liens must be subordinated to the FHA loan.
  • Borrower must be up-to-date on any federal debts.

We offer streamline refinances in numerous ways. You can select a no cost refinances (actually, no out-of-pocket expenses to the borrower) by selecting a slightly higher rate of interest on the new loan than if the borrower financed or paid the closing costs in cash. From this premium, the lender pays any closing costs that are incurred on the transaction.

Mortgage companies can also offer streamline refinances and include the closing costs into the new mortgage amount. This can only be done if there is sufficient equity in the property, as determined by an appraisal. 

Streamline refinances can also be done without appraisals, but the new loan amount cannot exceed what is currently owed, i.e., closing costs may not be added to the new mortgage with those costs either paid in cash or through the premium rate as described above. Investment properties (properties in which the borrower does not reside in as his or her principal residence) may only be refinanced without an appraisal and, thus, closing costs may not be included in the new mortgage amount.

FHA IS NOT a Bad Credit loan!

Lenders, and the crazy lender days from 2000 - 2006 are long gone. Bad credit, sub-prime, stated income, no doc, Alt-A, and everything else crazy is no longer available.

FHA is your best option if you are a weak credit risk, but FHA it is NOT a bad credit loan. You have to qualify, it has to make sense, and you have to have a little skin in the game (down payment).

The FHA 203(k) Renovation Loan, and the 203(k) Streamline

the FHA 203k loan comes in two versions. FULL, or Streamline. These loans are NOT what people think they are, and the vast majority of people inquirying about these loans do not end of getting one.


The FHA 203(k) loan offers flexible qualifying and low down payments:

  • FHA standard guidelines
  • Standard FHA down payment
  • Flexible credit qualifying
  • Assumable loans
  • Finance up to 6 months of mortgage payments
  • Purchase or Refinance and Improve all in one loan

The 203(k) loan program offers borrowers the resources to rehabilitate a home that may be in need of repair, either the home that they currently live in, or that special fixer-upper opportunity. One single loan is used to pay for the purchase (or refinance) and the cost of renovating the home.

Made available to certain lenders by the U.S. Department of Housing and Urban Development (HUD), the FHA 203(k) program has already provided many buyers with the funds necessary to buy their first home, or greatly improve a current home. The FHA 203(k) loan is available to borrowers of all income levels, to homeowners who plan to occupy the house, and for homes with one to four units.

203K Eligible Borrowers:

  • Owner Occupants - Purchase - Refinance
  • Non- Profits
  • Investors NOT allowed

Types of 203K Loans:

  • 30 or 15 year fixed rates
  • One year ARMS
  • Assumable to a qualified buyer, with no money down

Eligible Properties:

  • Single family dwellings
  • Condominium
  • Townhouse
  • Mixed Use (Storefront)
  • 1-4 Unit buildings- you can increase or decrease the number of units with this loan.

Structural Alteration and Reconstruction:

  • Changes for improved functions and modernization
  • Elimination of health/safety hazards
  • Changes for aesthetic appeal
  • Plumbing, heating air conditioning, and electrical upgrades
  • Well and/or septic repairs
  • Roofing, gutters and downspouts
  • Flooring, tiling and carpeting
  • Energy conservation improvements
  • Major landscape work and site improvement
  • Access for the disabled

Home Inspection:
The cost of your construction is estimated by an FHA Approved 203(k) consultant (estimator). The cost consultant assists you in determining the scope of repairs and the costs budgeted for the renovation job.

  • Perform a home inspection to create preliminary costs estimates based upon FHA minimum property standards plus the scope of work as defined by the home owner/buyer.
  • Once project has been determined, the cost consultant prepares a "work-write up" and 3 contractor bid packages are issued to the home owner/buyer.

The appraiser will be given a copy of your "work-write up" to estimate an after improved value for your new or current home. We loan against that improved value thus allowing you to finance the cost of repairs.

Other Eligible Costs:

  • Contingency reserve (10-15%)
  • Up to 6 months PITI mortgage payments
  • Permit costs
  • Consultant fees
  • Inspection and title update fees
  • Architectural & Engineering fees (if needed)

Here are a few suggestions to get you started:

  • Get pre-approved using our online application with true 203(k) experts
  • Locate a home and submit a contract
  • Once the contract is accepted, contact us for the names of FHA approved consultants to get you started

We offer both VA and FHA Loans. While we are an approved lender, we are not part of HUD, FHA, The United States Government, or the Department of Veteran Affairs. We are not acting on behalf of, or under the direction of HUD/FHA or the Federal Government. FHA and VA do not lend directly to the public, only through approved lending institutions like Mortgages Unlimited. 

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Mortgages Unlimited Minnesota
33 Wentworth Ave E, St Paul, MN 55118
(651) 552-3681

Member, Minnesota Mortgage Association

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Mortgages Unlimited, Inc. NMLS # 225504. Joe Metzler NMLS # 274132