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FHA Lending

FHA Lending guidelines are more flexible than those of any other conventional loan programs. This is the reason why FHA loans are getting popularized and more and more people are seeking a mortgage insured by the Federal Housing Administration. However, there are certain limits on the amount you can borrow from an approved lender depending on the state you are living in. There are even rules for the lenders regarding the areas they can operate business or rates they should offer to the borrowers. All requirements must be fulfilled before one can see the approval and underwriting of a loan request.

FHA Lending Guidelines



A lender must follow FHA lending guidelines in letter and spirit in order to protect the public trust and FHA insurance fund. The complete guidelines for lenders in connection with approval of loans for purchasing or refinancing single family homes and condominiums can be found elsewhere on this website.

Failure to comply with HUD’s guidelines on lending standards involving origination, underwriting and servicing of a mortgage may lead to strict action from the US Department of Housing and Urban Development.

They may be referred to the Mortgagee Review Board and may face appropriate sanctions. These sanctions may include termination of FHA approval, penalties, debarment, suspension and a Limited Denial of Participation (LDP).

FHA lending limits are dependent on the areas being served. HUD determines the maximum amount that can be lent under a loan program by taking into account the average home prices of the region. One can find such lending limits for the area concerned from the website of the Department of Housing and Urban Development.

FHA Lending Areas



A lender is not allowed to serve beyond the areas approved by the Federal Housing Administration for conducting mortgage business. This is known as the Area Approved for Business (AAFB) or Origination Lending Area.

The state where the lender’s office is located and all the states adjacent to it are generally the areas approved by FHA for mortgage business. The rules regarding AAFB can be found in Handbook 4155.2, which is available online.

To register for a direct lending branch that allows a lender to interact with the customers through Internet, direct mail or telemarketing, one should submit the completed Branch Registration Form 92001-B. This form is available in PDF format at HUD website.

The completed application along with a copy of all required documents should reach at the following:

By US Mail

HUD, FHA Lender Approval and Recertification Division,
451 7th Street, S.W., Room B133/P3214,
Washington, DC 20410

By an Overnight Delivery

HUD, FHA Lender Approval and Recertification Division,
490 L Enfant Plaza East, SW, Suite 3214,
Washington, DC 20024

Website: www.hud.gov




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