Loan Limits

• The FHA does not loan the same amount of money in rural parts of the country as it does in larger cities and metropolitan areas. A home costs less in rural Kansas than it does in San Francisco. Because of this, the FHA does not allow loans over $271,050 anywhere in the state of Kansas for a one-unit home. If a homeowner purchases a one-unit house in San Francisco, the FHA allows a loan amount of up to $729,750. While this difference may seem unfair, it is because the housing prices and the cost of living in the two areas are very different.
  
  

Number of Loans

• In most cases, the FHA only allows one FHA loan per borrower. The FHA is not a program designed to help real estate investors build a portfolio. It is a program designed to help people purchase a home to live in. Typically, the FHA only wants to insure one loan at a time. There are exceptions to this rule, however. If a family purchased a two-bedroom home five years ago, and now needs a larger home to accommodate children, then the FHA will allow them to finance the new home with an FHA loan. The FHA would not require the homeowners refinance the old FHA loan into another loan program prior to closing on the new FHA loan. If there isn't a situation such as this, then the homeowner must refinance or pay off the existing FHA loan before obtaining a new FHA loan.
  
  

Debt-to-Income Limits

• The FHA wants to ensure the home is affordable for the borrower. One way to ensure this is to place limits on how much of the borrower's gross monthly income is obligated to paying monthly debts. The FHA lender must review all of the debts listed on the credit report, add up all of the minimum payments required and then add the new mortgage payment to the total. The FHA wants the total amount of debts owed not to exceed 40 to 43 percent of the borrower's gross monthly income. Additionally, the FHA prefers the mortgage not exceed 38 percent of the borrower's gross monthly income. These limits are flexible, but not flexible enough the FHA will allow someone to be required to pay 60 or 70 percent of her gross income toward her debts each month.
  
  

Property Limits

• The FHA lends only on residential properties. The FHA provides financing for one- to four-unit homes, condominiums, townhouses, modular homes and manufactured homes. The FHA finances properties in both rural parts of the country and urban parts of the country. The FHA even provides loan programs for rehabilitating a home and a reverse mortgage program for homeowners who are eligible for Social Security.