Core Insights - FHA loans are government-backed mortgages designed to make homeownership more accessible for borrowers with limited down payment funds and less-than-ideal credit histories [1] - The Federal Housing Administration (FHA) sets annual loan limits that vary by county and property type, reflecting changes in home prices [4][5] FHA Loan Limits - The FHA loan limit for 2025 is determined based on the national conforming loan limit set by the Federal Housing Finance Agency (FHFA), which is $806,500 for one-unit properties [4] - The lowest FHA loan limit in 2025 is $524,225, which is 65% of the national conforming loan limit, while the ceiling for high-cost areas is $1,209,750, calculated as 150% of the conforming loan limit [5] Comparison with Conforming Loans - FHA loan limits are generally lower than those for conforming loans, with a maximum FHA loan amount of $524,225 for single-family homes compared to $806,500 for conforming loans in most counties [6] FHA Loan Requirements - FHA loans require a minimum credit score of 580 for a 3.5% down payment, while a score between 500 and 580 necessitates a 10% down payment [7] - Lenders typically prefer a debt-to-income (DTI) ratio below 43%, although some may accept higher ratios depending on other financial factors [7] Additional Considerations - FHA loans require mortgage insurance premiums (MIPs) regardless of the down payment amount, including an upfront MIP of 1.75% of the loan amount and ongoing annual MIP [9][12] - Properties financed with FHA loans must meet specific appraisal standards to ensure they meet the FHA Minimum Property Standards [12]

Core Insights - A piggyback loan involves taking out a second mortgage alongside a primary mortgage to finance a home purchase, allowing buyers to avoid private mortgage insurance (PMI) and jumbo loans [2][3][5] Summary by Sections Definition and Structure - A piggyback loan consists of two mortgages: the primary mortgage typically covers 80% of the home price, while the piggyback loan covers a portion of the down payment, often structured as 80-10-10 [2][6][7] Scenarios for Use - Piggyback loans are beneficial for buyers who cannot afford a 20% down payment to avoid PMI, which can cost between $30 to $70 per $100,000 borrowed [3] - They are also useful for purchasing homes exceeding the conforming loan limit, which is $806,500 in 2025 and will rise to $832,750 in 2026 [4] Types of Piggyback Loans - Piggyback loans can be structured as home equity loans or home equity lines of credit (HELOCs), with home equity loans providing a lump sum and HELOCs offering a revolving line of credit [9][10][11] Pros and Cons - Advantages include lower upfront cash requirements, avoidance of PMI, and the ability to stay within conforming loan limits [12][18] - Disadvantages include potentially higher interest rates on the second mortgage, stricter qualification requirements, and the need to pay closing costs for both loans [12][18] Qualification Criteria - Qualifying for a piggyback loan typically requires a good credit score (usually 700 or higher) and a debt-to-income ratio (DTI) of 43% or lower [15][16] Alternatives to Piggyback Loans - Alternatives include FHA loans, USDA loans, VA loans, and conventional loans with lower down payment options, which may be more accessible for some buyers [19][20][21][22] Refinancing Options - Piggyback loans can be refinanced to obtain lower interest rates or consolidate into a single mortgage, but this typically requires a good credit score and sufficient home equity [23]