Purchase
FHA loans
The most forgiving credit box we lend in, with the trade-off stated up front.
What a FHA loan actually is
FHA insures the loan; Keystone makes it. That insurance is what lets us approve a 580 score with 3.5% down, count non-occupant co-borrowers, and work with a debt-to-income ratio that a conventional file would not survive. For borrowers repairing credit after a hard few years it is frequently the only door that opens.
The cost of that door is mortgage insurance. FHA charges an upfront premium of 1.75% of the loan amount, financed into the balance, plus an annual premium of 0.55% for most 30-year loans above 95% LTV. If your starting loan-to-value is above 90%, that annual premium stays for the life of the loan. We tell every FHA borrower the same thing: plan the refinance into conventional at 80% LTV from day one.
Best suited to
- Scores between 580 and 659 where conventional PMI pricing is punishing
- Buyers using PHFA or city down payment assistance
- Files that need a non-occupant co-borrower to clear the ratio
- Properties needing modest repairs that a seller will not make
What comes with the loan
- TOTAL Scorecard automated underwriting with a manual downgrade path if the score will not run
- Non-occupant co-borrower structuring, common for first purchases in this market
- 203(b) standard purchase and 203(k) limited rehab to $75,000 of work
- Down payment assistance layering with PHFA Keystone Advantage second liens
- Written comparison of FHA against conventional at your exact score and down payment
- A refinance calendar showing the month your balance reaches 80% of the purchase price
How a file moves
- 01
Credit review first
Before anything else we look at whether a 20 to 40 point rescore moves you into conventional territory. Sometimes it takes four weeks and saves $180 a month.
- 02
Pre-approval
Full documentation and a TOTAL Scorecard run. FHA pre-approvals in Philadelphia carry more weight when the letter names the underwriter, so ours do.
- 03
Property condition
FHA appraisers apply minimum property standards. Peeling paint on a pre-1978 row home, a missing handrail or an unvented water heater will be called out. We flag likely issues from the listing photos.
- 04
Underwriting
Conditions batched once. Median complete-file to clear-to-close on our FHA purchases is 14 business days (sample figure).
- 05
Closing and the calendar
You leave settlement with an amortization schedule marked at the 80% LTV month, which is when the conventional refinance conversation should start.
Why borrowers choose it
Lowest credit floor we offer
580 with 3.5% down. Down to 500 with 10% down on a manual underwrite.
Assumable
FHA loans are assumable by a qualified buyer, which becomes a genuine selling feature when market rates are higher than your note rate.
Higher DTI tolerance
Approvals above 50% back-end ratio are routine with TOTAL Scorecard and compensating factors such as reserves or residual income.
Rehab built in
203(k) limited rolls up to $75,000 of repairs into the purchase loan, which suits a row home that needs a kitchen and a roof.
What to watch out for
- Annual MIP is permanent above 90% starting LTV. Budget for the eventual conventional refinance.
- The Philadelphia MSA one-unit limit of $524,225 rules FHA out for most of Center City and the Main Line.
- Condominium projects must appear on the FHA approved list or qualify for single-unit approval.
FHA questions we get asked
Still unclear? Call (215) 555-0145 and ask for the originator covering your county.
All questionsOnly if your loan-to-value at origination was 90% or lower, in which case the annual premium drops off after 11 years. Above 90% it remains for the full term. The standard route off FHA MIP is a refinance into a conventional loan once you reach 80% loan-to-value.
Yes. On an FHA purchase the entire 3.5% may come from an acceptable donor, typically a family member, employer, or a governmental or non-profit assistance program. We need a signed gift letter and a documented transfer trail.
When a file receives an automated Accept but contains a factor such as a recent collection or an undisclosed debt, FHA requires it to be re-underwritten by a human against tighter ratio and reserve rules. We tell you the day it happens, not the week before closing.
Not in its current condition. The appraiser will note it as a health and safety issue, and it must be remediated before closing or financed through a 203(k). We would rather find that in week one than week five.
Programs worth comparing
Conventional
Conforming loans to $832,750 with cancellable PMI
First-time buyer
PHFA pairing, grant stacking and the 3% down route
FHA and VA streamline
No appraisal, no income documents in most files
Find out if FHA fits
Fifteen minutes, a soft credit pull, and a straight answer about which program actually suits your file.
No application fee. Soft credit pull at pre-qualification. Flat $1,095 origination at closing.