Iowa FHA Lenders – Iowa FHA Loan Requirements 2024

Iowa FHA Loans –  Requirements and Loan Limits for 2024

Iowa FHA loans offer low down payment options, flexible credit requirements, and government-backed security, making them an accessible choice for first-time homebuyers and those with lower credit scores

We have been helping homebuyers to purchase or refinance a home for well over 20 years and FHA loans are our specialty. We will take you through the Iowa FHA loan requirements, detail what is needed to qualify, then help you to get pre-qualified.  

If you already know that an FHA loan is right for you, then click to connect with an Iowa FHA lender whether you live in Des Moines, Cedar Rapids, Davenport, Sioux City, or anywhere else.

Iowa Division of Banking, Mortgage Banker License #2020-0014 dba UMC Mortgage Company / Other Trade Name #2 License #2020-0053 dba United Faith Mortgage

FHA Loan Benefits

Iowa FHA loan benefits include a low down payment, easier credit qualification, and the option to roll closing costs into the loan, making homeownership more affordable and accessible. 

These are the benefits of an FHA mortgage versus a conventional loan:

• Lower credit scores permitted
• Lower down payment requirement
• FHA interest rates are lower than conventional rates
• Gift funds allowed
• Seller closing cost contributions are allowed
• FHA loans are assumable
• Co-signers allowed
• Higher debt to income ratios permitted
• Shorter bankruptcy waiting periods
• More programs available for creative financing

These are just some of the basic benefits of an FHA loan. There may be other reasons why the loan program is a great fit for you. Give us a call to discuss the pros and cons of an FHA loan and to see how much you may qualify for.

Iowa FHA Loan Requirements for 2024

These are the basic FHA loan eligibility requirements for this year. All of these must be met to be approved for an FHA loan. If you are not positive on whether you meet these standards or have questions, an FHA lender can help.

• Down payment of 3.5% or 10% if your credit score is below 580
• 2-year employment history with some exceptions allowed
• Fully document your income for the past two years
• Minimum FICO score requirement of 500 – down payment will vary
• Mortgage Insurance Premium (MIP) is required for every FHA loan
• Maximum debt to income ratio of 43% with exceptions up to 56%
• Property requirement – the home must be your primary residence
• No bankruptcies or foreclosures in the past two years

This government backed mortgage is setup to best help first time home buyers. We have a loan calculator below which can help you to quickly get an idea of what your payment could look like.

FHA Down Payment Requirements in Iowa

The down payment requirements for an FHA loan is the same in every state. The minimum requirement for an FHA loan is 3.5% of the purchase price. However, if your credit score is below 580, then the down payment requirement will be 10%.

There are ways to reduce your out of pocket down payment expenses and one of our loan officers can walk you through those options. We will also reference some down payment assistance programs below.

If you do not have the down payment needed, you can also use gift funds from a relative.

FHA Down Payment Assistance Programs in Iowa

There are various down payment assistance programs in every state. Below is a list of just a few down payment assistance programs that may be available to you in Iowa. Home buyers will need to contact, and arrange for these programs independently. Lenders will accept the funds from these programs for your down payment but they will not arrange for the down payment assistance.

HomeStart Down Payment Assistance Program

Iowa Finance Authority Down Payment Assistance

Cedar Rapids Down Payment Assistance

Dubuque Home Buyer Assistance

Waterloo Down Payment Assistance

We also have a lender provided down payment assistance option for you. There is a minimum credit score requirement but the ability to include the assistance in the lender offer package is much easier than dealing with separate companies. If this is something you would like more information about, then contact us.

Loan Application and Pre-Approval Process

If you are looking for an FHA loan, there is an optimal process you should follow to get pre-approved.

1. The first step is to make sure you have the minimum down payment needed to qualify. There may be down payment assistance options
2. Next, check your credit and try to cleanup anything that is pulling down your scores
3. Get a copy of your tax returns for the past two years
4. Get copies of your pay stubs for the past month
5. Get copies of your last two months’ bank statements
6. Speak to an FHA lender about your loan scenario
7. Fully complete the loan application. 
8. Your loan officer will pull your credit and the liabilities will be imported into your loan application.
9. The automated underwriting system will quickly analyze your scenario and will return an approval if you meet the minimum standards.
10. The loan officer will issue the pre-approval letter so you can begin shopping for a home

Speak to a lender early in the home shopping process because they can identify opportunities to help with your FHA approval. This should be done months before you start looking for a home. Read more about how to get pre-approved for an FHA loan.

How Long Does the FHA Loan Process Take?

You can expect the entire process from the start of application to the day of closing to take about 30 days. However, the time can be reduced if you complete the application quickly and provide the required documentation up front.

Another factor in the time it can take is the experience level of your loan officer. Understanding how to package your loan for the underwriter is also a critical element in saving time.

When you receive the link to the loan application, make sure it is fully completed without anything missing before you submission. If there is data missing, the application cannot be moved forward and will delay the process.

Your loan officer will ask for very specific documents which must be sent in full before your application can go to underwriting. If you are missing one thing, you will stall the process because the package cannot be submitted without every document. 

Another time saver is to have an FHA inspector lined up and also a homeowner’s insurance agent selected. Finally, respond quickly whenever your loan officer reaches out to you.

Iowa FHA Loan Limits

Every county in the United States has specific maximum loan limits that are set for single family homes, as well as 2-4 unit properties. The limits are set based upon the average home sales value in that county. The base FHA loan limit for single family residences in Iowa for most counties is $498,257. Use this FHA loan limit lookup tool to see what the FHA loan limits are in your county.

FHA 203k Loans in Iowa

FHA 203k loans are a great program which will allow you to borrow the money needed to purchase the home plus additional funds needed to rehabilitate or remodel the home. This program is also available in your state and we work with lenders that help with your FHA 203k loan.

Home buyers should seriously consider this option when purchasing a home using FHA insured financing.

If you would like to fully understand how this program works, we suggest reading our article on FHA 203k loans.

FHA Streamline Refinance in Iowa

The FHA streamline refinance program is available to existing homeowners who would like to refinance for a lower rate while eliminating some of the refinance costs such as an appraisal. You may also get a discount on the mortgage insurance premium which is another advantage.

For more information, please read our article on the FHA streamline refinance.

What to Look for in an FHA Lender

There are a few things into consideration when looking at which lender to work with.  Some of these also may be, or should be very important to you as you continue shopping for an FHA loan.

A good FHA lender will:

• Allow for credit scores as low as 500
• Provide FHA 203k loans
• Offer competitive rates and fees
• Have a great processing and underwriting team
• Work closely with you throughout the loan process
• Communicate well and will provide you with updates along the way

Purchasing a house is likely one of the biggest decisions of your life. Let us help by taking you through all of the steps needed to close on your home.

FHA Mortgage Calculator

Frequently Asked FHA Questions

What are the FHA loan limits in Iowa, and do they vary by county?
The FHA loan limits change every year depending upon the average home sales prices from the prior year. There are standard limits that apply to most counties and higher limits for counties with more expensive homes.

What is the minimum credit score required to qualify for an FHA loan in Iowa?
The minimum credit score required for an FHA loan in Iowa is 500.

How much of a down payment is required for an FHA loan in Iowa?
The typical down payment is 3.5%, but can be up to 10% down when credit scores are below 580.

Are there any special programs or incentives for first-time homebuyers using an FHA loan in Iowa?
There are many first time home buyer programs in Iowa, but also a lender provided program that is available for those with credit scores over 620.

What types of properties are eligible for FHA financing in Iowa?
FHA eligible properties include 1-4 family residential homes, condos, townhomes, mobile homes, and mixed use properties where the residential portion is larger than the commercial square footage.

What are the closing costs associated with an FHA loan in Iowa, and can they be rolled into the loan?
You can expect the closing costs for for an FHA loan to be anywhere from 2%-4% of the purchase price. Those costs can be rolled into the loan for refinances.

How long does it take to get approved for an FHA loan in Iowa?
You can get approved for an FHA loan in less than 24 hours if you complete the application and provide the necessary documentation quickly.

Are there specific income requirements or limits for FHA loans in Iowa?
There are no specific income limits or requirements in Iowa versus other states. The maximum debt to income ratio for an FHA loan is 56.9%.

Can I use an FHA loan to buy a multi-family home in Iowa, and what are the requirements?
You can use an FHA loan to buy a multi family home and the requirements are a bit different. You may use a portion of the rental income from the other units to help qualify for the mortgage. Read more about FHA multi family loans.

What documentation do I need to provide when applying for an FHA loan in Iowa?
You should expect to provide the last 30 days pay stubs, last two months bank statements, and last two years W2’s and tax returns.

Can I get an FHA loan with a bankruptcy?
In general, you will need to wait two years before applying for an FHA loan after a bankruptcy. However, there are some exceptions which may allow you to apply sooner. Read our article on the bankruptcy waiting period.

Are all FHA lenders the same?
Not all lenders who offer FHA loans are the same. They all do not offer all of the FHA programs and their rates and fees may also vary. Most importantly, the individuals who help to process and underwrite your loan will have a huge impact on your FHA loan experience.

Can I use gift funds for an FHA loan?
FHA loans do allow for gift funds to cover your down payment as well as your closing costs. The gift funds must come from a relative or a close friend as approved by the lender. You will need to provide the lender with a gift letter that is signed by the donor.

Do I need an appraisal for an FHA loan?
The FHA does require an appraisal and inspection before your loan can be approved. The FHA inspection has clear guidelines on what needs to be repaired before your loan can close. They want to make sure home buyers are moving into a home that is safe and operational.

Can I get an FHA loan for an investment property?
FHA loans are for primary residences only and if your goal is to purchase an investment property, you cannot use FHA insured financing for that purchase. However, if you are currently living in a home that is financed with an FHA loan, you can move to a new home and keep the current home as an investment.

FHA Facts and Statistics

We have FHA lenders who can help with your FHA loan in all 50 states