The following are the most commonly used FHA loan programs along with their characteristics.
There are multiple sections of "The FHA Act," these however are the primary programs most commonly utilized:
203b (Regular)
- Most widely used section of the act
- Can be used for 1-4 unit properties, PUD's, manufactured housing, but not condos
- Requires up-front and annual renewal MI
- Has a fixed rate on interest
234c (Condo)
- Used only for condominiums (not PUDs)
- Unit must be in an FHA-approved project
- Qualified spot condo approvals may be available
- Requires up-front and annual renewal MI
- Rate may be fixed or adjustable
251 "ARM" (Adjustable Rate Mortgage)
- Caps of 1% per year and 5% lifetime
- Margin 2.25% (most popular option)
- Index is tied to 1-year treasury bills
- Qualify at 1% above start rate if LTV is 95% plus
- May be used with all FHA acceptable properties (SFR 1-4 units, condominiums, PUDs)
- Requires both up-front and annual renewal MI
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