One step to attaining HUD’s mission is to provide loan products to buyers called FHA loans. An FHA loan is a mortgage insured by the Federal Housing Administration, a government agency within the U.S. Department of Housing and Urban Development. Borrowers with FHA loans pay for mortgage insurance, which protects the lender from a loss if the borrower defaults, in other words – can’t repay – on the loan.

Because of that insurance, lenders can offer FHA loans at lower interest rates and with less strict and more flexible qualification requirements, including a minimum down payment requirement of 3.5 percent. Conventional loans, in contrast, require a 20 percent down payment.

Because these homes and mortgage loan products are unique, the process for purchasing them is also unique. We’ll break it down for you below:

FHA Case Number
This is HUD’s property identification number, unique to each property. It will look something like this:

The FHA Loan Products

  • FHA 203b – Considered a “standard” FHA loan, these loans are eligible for properties where there are no significant repairs recommended after an appraisal.
  • FHA 203b with repair escrow – This type of loan product is for situations when the property being purchased requires repairs totalling less than $10,000 after appraisal.
  • FHA 203k – A Rehab Loan or rehabilitation loan is when a home needs significant repairs. This type of loan insures a single loan (adjustable or fixed-rate) that covers both the purchase and the repairs of a property.