Dayton Ohio FHA Mortgage

FHA mortgages are ideal for first time homebuyers who have less than 5% to put down on a home purchase, or who have less than perfect credit scores. FHA mortgages allow for existing homeowners to refinance up to 85% of their home’s value to get cash-out for any number of reasons (debt consolidation, home improvements, etc.), and the popular FHA Streamline refinance for homeowners who currently have an FHA mortgage and would like to take advantage of lower rates.

Dayton Ohio FHA Overview

The Federal Housing Administration (FHA), provides mortgage insurance on mortgages made by FHA approved lenders. FHA is the largest insurer of mortgages in the world, insuring over 34 million properties since it began in 1934. FHA is part of the Department of Housing and Urban Development’s (HUD) Office of Housing.

Ohio FHA Eligibility

Credit Scores and Maximum FHA Financing

Credit Scores and Maximum FHA Financing in Ohio
If the borrower's middle credit score is..Then the borrower is..
At or above 580Eligible for maximum financing
Between 500 and 579Limited to a maximum of 90% of the home's value
Less than 500Not eligible for an FHA mortgage

Keep in mind that most lenders have implemented stricter credit score requirements. Currently most lenders require a 640 middle credit score to obtain a FHA Mortgage in Ohio. Currently I have access to one lender that offers FHA mortgages with credit scores as low as 560, although it is very difficult to qualify due to additional requirements that are imposed regarding rent history, payment shock, etc.

Ohio FHA Credit History

The lack of credit history should not be used as the basis for rejecting a Ohio FHA mortgage application. Borrowers that do not have an established credit history will most likely need to provide payment history on some, possibly all of the following:

  • utility payment records
  • rental payments (12 months cancelled checks)
  • automobile insurance payments

Ohio FHA Collections and Judgments

FHA does not currently require that collection accounts be paid off as a condition of mortgage approval. However, court ordered judgments must be paid off before a mortgage is eligible for FHA.

Ohio FHA Past Bankruptcy Waiting Period

Chapter 7 Bankruptcy does not disqualify a borrower from obtaining a FHA mortgage if at least 2 years have elapsed since the date of discharge and during those 2 years the borrower:

  • re-established good credit, or
  • chose not to incur new credit obligations

Negative credit after a bankruptcy can be a major hurdle to obtaining a FHA mortgage in Ohio

Chapter 13 Bankruptcy does not disqualify a borrower from obtaining a FHA mortgage, provided that the lender documents that:

  • one year of the pay-out period under the bankruptcy has elapsed
  • the borrower’s payment performance has been satisfactory and all required payments have been made on time, and
  • the borrower has received written permission from the bankruptcy court to enter into the new FHA mortgage

Ohio FHA Past Foreclosure Waiting Period

A borrower that defaulted on a prior mortgage (regular foreclosure, deed in lieu of foreclosure, or gave the property back in a bankruptcy) must wait 3 years before regaining eligibility for a FHA mortgage. The 3 year waiting period, generally, begins when the prior property transfers out of the borrower’s name.

Ohio FHA Past Short-Sale Waiting Period

A borrower is not eligible for a new FHA mortgage if they pursued a short sale agreement on their principal residence simply to:

  • take advantage of declining market conditions, and
  • purchase a similar or superior property within a reasonable commuting distance at a reduced price as compared to current market value.

If the borrower was current on their mortgage at the time of Short-Sale then the borrower is considered eligible for a new FHA mortgage if, as of the date of the new mortgage application, all

  • mortgage payments on the prior mortgage were made within the month due for the 12 month period preceding the short-sale, and
  • installment debt payments for the same timer period were also made within the month due.

If the borrower was in default on the mortgage at the time of short-sale, they are not eligible for a FHA mortgage for 3 years from the date of the sale.

Dayton Ohio FHA Loan Limits

Dayton Ohio FHA Loan Limits (area counties)
One-FamilyTwo-FamilyThree-FamilyFour-Family
Montgomery County$271,250$347,250$419,750$521,650
Clark County$271,050$347,000$419,425$521,250
Darke County$271,050$347,000$419,425$521,250
Greene County$271,250$347,250$419,750$521,650
Miami County$271,250$347,250$419,750$521,650
Preble County$271,250$347,250$419,750$521,650

Dayton Ohio FHA Purchase Mortgage

The minimum down payment for a FHA mortgage is 3.5% with a credit score of 580 or higher. The down payment may be gifted to the borrower by a family member.

Dayton Ohio FHA Refinance Mortgage

The maximum financing for a FHA refinance is 97.75% of the home’s value if the borrower is just paying off the outstanding mortgage.  The maximum financing for a Cash-Out FHA refinance is 85%, the cash can be used for debt consolidation, home improvements, etc.

Dayton Ohio FHA Streamline Refinance

The FHA Streamline Refinance is for homeowners who currently have a FHA mortgage. The program allows you to reduce your interest rate, and most times you don’t have to get an appraisal.  Call for more details on this one of a kind program.