“Is there a minimum amount for FHA Loans? Someone told me you have to borrow at least $90,000. Does the loan depend on your annual income?”
FHA mortgages are not approved or denied based on the dollar amount of your annual income, but rather on your ability to afford the loan based on your financial obligations (including an estimate of your monthly mortgage payment) compared to your monthly income. Your debt-to-income ratio is more important in the loan approval equation.
When it comes to FHA loan amounts, the minimum loan is based on the appraised value of the property or the asking price, whichever is lower.
The FHA loan amount is affected by how much down payment you will be required to make (3.5% minimum) plus any approved add-ons to the mortgage loan amount such as approved closing costs, discount points where permitted, or added funds for energy-efficient improvements to the home under the FHA Energy Efficient Mortgage program.
There is no arbitrary dollar amount set as a minimum FHA loan. However, for all new purchase loans, there are regulations that govern how much the FHA can guarantee and there is a restriction on FHA forward mortgages where cash back to the borrower is concerned. FHA loans for new purchases can’t be made for an amount larger than the asking price/appraised value with the intention of giving cash back to the borrower.
Some house hunters are interested in larger loans for this purpose, but under the FHA single family home loan program, no cash back is allowed in nearly all cases except for refunds of money paid up front that was later financed into the loan.
FHA mortgage loans have provisions for high-cost housing markets as well as for low-cost housing markets, so borrowers can expect their FHA loan options to be appropriate for the housing market where their potential new home is located.