FHA Mortgage Programs

Your Path to an FHA Mortgage

Backed by the Federal Housing Administration, FHA loans deliver lower down payment requirements, flexible credit guidelines, and competitive interest rates—providing a clearer, faster path to buying or refinancing your home.

FHA Guideline Highlights

Government-backed flexibility built for modern buyers.

3.5% Down

Down Payment Requirement

Significantly lower upfront cash than conventional loans.

100% Allowed

Family Gift Funds

Your down payment can be 100% gifted by family.

Up to 6%

Seller Closing Credits

Sellers can contribute toward your closing costs.

580+ Credit

Flexible Qualification

Accessible credit thresholds and flexible DTI rules.

Victor Calaguian

We had an outstanding experience working with Martin and his team at Watermark while purchasing our first home. As first-time homebuyers, the process felt overwhelming at times, but Martin guided us every step of the way with professionalism, patience, and expertise. His team was responsive, professional, and kept everything moving smoothly from start to finish. Their communication and attention to detail made what could have been a stressful process feel easy and manageable. We are so grateful for Martin, Dana, and the entire Watermark team for helping us buy our first home. We couldn't have asked for a better lending partner and would highly recommend them to anyone looking for a knowledgeable and customer-focused mortgage team. Thank you for helping make this milestone possible!

Adam Helfand

Ron and Dana were outstanding in their attention to detail, professionalism, and assistance.

Thu Nguyen

I'm glad I found this lender. They offered a competitive rate and reasonable closing costs. Mike and Dana were very helpful throughout the home-closing process. They responded quickly to my questions, and the loan closed quickly as well.

Ally

Worked with Ron Trejo to sort a refinance when I was buying an ex out of a house. He was very patient as the process (due to issues on my end with the ex) was dragged out a bit longer than it should have been. Definitely recommend, and I would refinance through them in the future!

Jessica Samuel

Douazong Lee Was amazing through out the process. She was very honest and trustworthy. She was always available to help. She gave us the best rate and we are very happy.

Jack H

The Finest Customer Service ... Period! I had the good fortune to reach Edie, Senior Servicing Manager for the bank when I had questions about our mortgage. She was one of the most knowledgeable financial professionals I have ever spoken with. She was preparing for an important meeting (which usually results in a transfer to another person/department). Did this happen? ... NO it did not. Despite her need for uninterrupted focus, she took my call, never made me feel rushed, and answered all my questions ... which took a good 15 minutes out of her day. One of the qualities I relished most about Edie was her enthusiasm and sense of humor. I felt like I was speaking with a good friend that really cared about me. I wish all my interactions were like that. Edie even went so far as to email me all the documents that I needed AND gave me her direct line, just in case I had more questions ... Who does that?? ... Clearly someone that loves their job and puts the bank's customers first. Watermark Capital is lucky to have Edie! If I could give her 10 stars I would. She's just that good. PS. If you're looking for an exceptional bank ... look no farther than Watermark Capital. I've had my mortgage with them for years and they are one of the most responsive and helpful banks I have ever dealt with.

Gib Fugate

My wife and I recently worked with Douazong Lee and Stephanie Marroquin and our experience could not have been more courteous, insightful and professional. Not only did we complete our mortgage refinance in less than a month but the interest rate and closing costs were the best we could find. We highly recommend Watermark Capital, Inc and Douazong and Stephanie! Gib and Jane Fugate, West Lafayette, IN

Daniel Wernicke

This is the second time I’ve refinanced with Watermark and, in both instances, they offered the best rate and were quick to close. Mike Greenberg and Dana Chupp are a breeze to work with and really do put in the effort to provide excellent service. They have a secure online portal for submitting and reviewing financial docs which gives me peace of mind that sensitive info isn’t kept in someone’s email inbox. I wouldn’t hesitate to refinance with Watermark again.

Sean Kittridge

We worked with Ron Trejo at Watermark to refinance our mortgage, and it was an extremely positive experience. Ron was honest, knowledgeable, and always available when we had questions about numbers or next steps. It's a big decision, but Ron and Watermark made it a pleasant one.

NOT JUST FIRST-TIMERS

Accessible primary home financing for both new and repeat buyers

CO-SIGNER FRIENDLY

Add a non-occupant family member to boost your qualifying income

GOVERNMENT INSURED

Federally backed financing to protect & support everyday buyers

The Basics

What is an FHA Loan?

An FHA loan is a government-backed mortgage designed to help borrowers buy or refinance a home with more forgiving financial requirements.

Because these loans are insured by the Federal Housing Administration (FHA), lenders are protected against default. This government backing allows lenders to offer much more flexible credit guidelines, competitive interest rates, and down payment requirements as low as 3.5%. Whether you are a first-time homebuyer or a current homeowner looking to lower your monthly payment, FHA financing is designed to make sustainable homeownership significantly more accessible.

FHA Loan at a Glance

Down payment requirements:

As low as 3.5% of the total purchase price. Borrowers also have the flexibility to use approved gift funds from family members to cover these upfront costs.

Credit flexibility:

Significantly more flexible credit score requirements and expanded debt-to-income (DTI) limits compared to standard conventional mortgages.

How interest works:

Competitive interest rates available in both predictable fixed-rate and adjustable-rate mortgage (ARM) structures.

Best for:

First-time homebuyers, buyers with limited upfront savings, and current homeowners looking for flexible refinancing options.

Built for Everyday Homebuyers

Conventional loans often demand massive down payments and flawless credit. FHA loans remove traditional barriers, offering government-backed flexibility to help you achieve homeownership faster.

The First-Time Buyer

Limited Down Payment Savings

You want to buy a home but haven’t saved 20%. FHA loans allow you to purchase a primary residence with as little as 3.5% down.

The Rebuilding Borrower

Less-Than-Perfect Credit

Government-backed insurance allows lenders to offer flexible approvals for credit scores starting at 580.

The Budget-Conscious Buyer

High Debt-to-Income Ratios

FHA guidelines are highly forgiving, allowing for expanded debt-to-income (DTI) limits and non-occupant co-signers to help you qualify.

The "House Hacker"

Multi-Family Ambitions

You can use a standard FHA loan to purchase a 2-to-4 unit property with just 3.5% down, as long as you live in one of the units.

Who is an FHA Loan Built For?

FHA mortgages are designed for everyday buyers who want a secure, government-backed path to homeownership without the rigid barriers of conventional lending. These loans are ideal for the following profiles:

Cash-Conscious Buyers: Homeowners who prefer to keep their savings liquid for emergencies, home furnishings, or investments rather than tying it all up in a massive 20% conventional down payment.
Multi-Generational Qualifiers: Families or partners who need to combine resources to get approved. FHA guidelines allow for non-occupant co-borrowers, meaning a parent or relative can help you secure the loan without living in the home.
High-DTI Earners: Recent graduates or young professionals dealing with high student loan balances or auto loans who need the flexibility of expanded Debt-to-Income (DTI) thresholds to qualify for their desired purchase price.
Comeback Borrowers: Individuals who have experienced a past financial hardship—such as a bankruptcy, foreclosure, or short sale—but have re-established their stability and want to buy without waiting the typical seven years required by major banks.
Strategic Negotiators: Homebuyers looking to maximize their purchasing power in a buyer's market. FHA allows sellers to contribute up to 6% of the purchase price toward your closing costs or permanent interest rate buy-downs.

Frequently Asked Questions

What is an FHA loan, and how does government backing work?

An FHA loan is a home mortgage insured by the Federal Housing Administration (FHA), a division of HUD, designed to lower the barrier to homeownership. The government insurance protects lenders against losses from default, enabling financial institutions to offer lower down payments, flexible credit requirements, and competitive interest rates to qualifying borrowers.

What credit score and down payment are required to qualify for an FHA loan?

An FHA loan requires a minimum down payment of 3.5% for borrowers with a credit score of 580 or higher. Borrowers with credit scores between 500 and 579 may still qualify for FHA financing, but typically require a 10% down payment along with additional underwriting considerations.

How does FHA Mortgage Insurance (MIP) work, and can it be removed?

FHA Mortgage Insurance Premiums (MIP) are mandatory fees that protect the lender, consisting of an Upfront Mortgage Insurance Premium (UFMIP) paid at closing and an Annual MIP divided into 12 monthly payments. For most FHA loans originated with a 3.5% down payment, annual MIP stays for the entire life of the loan, though homeowners frequently refinance into a conventional loan once they build at least 20% home equity.

Can family gift funds and seller contributions be used toward an FHA loan?

Yes, FHA guidelines allow 100% of the required 3.5% down payment to be gifted by an eligible family member, employer, or charitable organization with proper documentation. Additionally, FHA rules allow sellers to contribute up to 6% of the purchase price toward borrower closing costs, prepaid expenses, and discount points.

What is an FHA Streamline Refinance, and how does it work?

An FHA Streamline Refinance is a simplified refinance program for existing FHA mortgage holders designed to lower monthly payments or secure a better interest rate with minimal paperwork. In most cases, FHA Streamline refinances do not require a new property appraisal, employment verification, or credit check, allowing for a faster and less intrusive closing process.

Can I use an FHA loan to buy a 2-to-4 unit property or investment home?

An FHA loan can be used to purchase a 2-, 3-, or 4-unit residential property with just 3.5% down, provided the borrower occupies one of the units as their primary residence. FHA loans cannot be used for purely non-owner-occupied investment properties or secondary vacation homes.

How does an FHA cash-out refinance work?

An FHA cash-out refinance allows eligible homeowners to replace their current mortgage—whether conventional or FHA—with a new FHA loan, withdrawing up to 80% of the home’s appraised value in cash. Homeowners frequently utilize FHA cash-out refinances to consolidate high-interest debt, fund major home renovations, or cover significant personal expenses.

How long after a bankruptcy or foreclosure do I have to wait to apply for an FHA loan?

FHA guidelines feature significantly shorter waiting periods following major credit events compared to standard conventional mortgages, requiring just two years after a Chapter 7 bankruptcy discharge and three years after a foreclosure. In certain cases involving documented extenuating circumstances beyond the borrower’s control, these waiting periods may be evaluated with additional flexibility.

Reviewed by Nick Joutz

Founder, Principal | NMLS #9220

Ready to unlock your path to homeownership?

Experience a streamlined, advisor-led process designed to help you leverage government-backed flexibility. No hard credit pull required to see your options.

Tell us about your target home purchase price, down payment savings, or refinancing objectives.

Our FHA specialists review your finances to maximize your buying power & match you with the best loan parameters.

Receive a clear, customized roadmap to closing your FHA purchase or refinance without the standard retail bank red tape.

Legal & Compliance Disclosures: FHA loans are subject to borrower qualification, credit approval, and underwriting guidelines. Approval is not guaranteed. Minimum down payment requirements, interest rates, loan limits, and Annual Percentage Rates (APRs) vary based on borrower credit score, property location, and specific program selection. FHA loans require both an Upfront Mortgage Insurance Premium (UFMIP) and Annual Mortgage Insurance Premiums (MIP). Watermark Capital, Inc. is an FHA-approved independent mortgage lender and is not acting on behalf of or at the direction of HUD, the FHA, or the Federal Government.

State Availability & Servicing: Watermark Home Loans lends in most U.S. states. For our full state licensing footprint, see the Licenses page. Watermark Capital, Inc. sells and services Fannie Mae, Freddie Mac, and Ginnie Mae loans. Proprietary second-mortgage loans, including the products described on this page, are not serviced by Watermark; servicing transfers after closing.

Credit Inquiries: Submitting the initial buying power form does not trigger a hard credit inquiry. A hard credit pull is only required when you choose to submit a formal mortgage application.

Watermark Capital, Inc. is an Equal Housing Lender. NMLS #1838.