Now Available: 2014 FHA Handbook for Borrowers, Home Buyers

The Home Buying Institute has published a 60-page handbook that explains the FHA loan program to borrowers. The handbook was written specifically for home buyers and mortgage shoppers, using plain English and plenty of helpful explanations. It is available in PDF format for immediate download. Any home buyer researching his or her mortgage options will benefit from reading this new e-book.

Editor’s Update: We’ve made the FHA handbook free for everyone. We have also launched a new website to increase awareness of, and access to, this helpful resource. Visit to download your copy of the book at no cost.

Written for Home Buyers and Mortgage Shoppers

The Department of Housing and Urban Development (HUD) website offers thousands of pages of supporting documents, covering all aspects of the FHA program. But most of those documents speak to mortgage professionals in particular. They are not written for home buyers.

Additionally, the sheer volume of these documents can be overwhelming to the layperson. (Consider: Their “FHA Starter Kit” for mortgage lenders includes more than a dozen individual handbooks, totaling thousands of pages in length.)

The 2014 FHA Loan Handbook, on the other hand, offers a 60-page explanation of the program. It strips away extraneous material and focuses on the topics that are most relevant to home buyers and borrowers. It covers the pros and cons of FHA loans, the application process, basic eligibility criteria, qualification requirements and more.

Current Information, Including Recent FHA Changes

The FHA mortgage insurance program has changed a lot over the last few years. The Department of Housing and Urban Development published 46 “Mortgagee Letters” in 2013 alone. Many of those letters brought changes to the FHA loan program. As a result, there is a lot of outdated information online today.

The 2014 FHA Loan Handbook incorporates all of the major changes of the last few years. It has been fully updated for 2014. It explains the nature of the changes and how they might affect borrowers in 2014.

The handbook is divided into five chapters. Here is a chapter-by-chapter summary of the information found within.

Chapter 1 — Different Types of Mortgage Loans

Most of this book focuses on the Federal Housing Administration loan program (it is called the “FHA Loan Handbook,” after all). But in order to understand the pros and cons of these loans, borrowers must view them in a broader context. Borrowers need understand the other types of mortgage products and programs as well. The first chapter of the handbook provides an overview of the different loan types. It explains the difference between fixed and adjustable-rate mortgages, FHA vs. conventional, etc.

Chapter 2: What Is an FHA Loan?

Chapter 2 introduces the reader to the HUD 203(b) Mortgage Insurance Program, more commonly known as the FHA loan. In this chapter, readers will learn how the program works, how it has changed in recent years, and the pros and cons of using an FHA-insured mortgage loan when buying a house.

Chapter 3: Minimum FHA Requirements

This chapter of the 2014 FHA Handbook explains the basic eligibility and qualification criteria for borrowers. It covers credit-score requirements, minimum down payments, debt-to-income ratio limits, and more. It also explains the concept of “compensating factors,” an important aspect of FHA qualification and approval. Many borrowers don’t realize there are exceptions to a lot of HUD’s rules and requirements. That is a key element of Chapter 3. It also explains how lenders can impose their own standards on top of those issued by HUD.

Chapter 4: Property Requirements for FHA Loans

In addition to imposing specific requirements for borrowers, the Department of Housing and Urban Development also has standards for the property being purchased. Chapter 3 of the 2014 FHA Handbook explains these requirements in detail. It also clarifies what is often a confusing subject for home buyers: the appraisal process. Lastly, it explains the differences between buying a “regular” detached home versus a condo unit, where HUD is concerned.

Chapter 5: FHA Loan Process

How do I apply for an FHA loan? How long does the process take? What happens during underwriting? These are just a few of the procedural questions we receive from our readers every month. Chapter 5 of the handbook walks the reader through the typical FHA application, underwriting and approval process.

Excerpt: Introduction to the FHA Handbook

What follows is an excerpt from the book’s introduction:

Thinking about using an FHA loan to purchase a home? You’re not alone. This program has become one of the most popular home-financing products in use today, accounting for roughly 20% of all mortgage loans generated over the last year. They are especially popular among first-time home buyers, though they are not reserved for that group.

The FHA program has changed in many ways since the housing market crashed. As a result, there is a lot of “unintended misinformation” online — outdated articles, guides, etc. That’s where this handbook comes into the picture. To create this book, we spent weeks digging through official program guidelines, speaking to lenders, and researching current trends within the mortgage industry. While it may not cover every aspect of FHA lending (no 60-page e-book could accomplish that), it does cover most of the things you need to know as a borrower.

This handbook is designed to do three things:

1. Give you a solid understanding of how FHA home loans work
2. Help you decide if an FHA loan is the right mortgage product for you
3. Provide an overview of current lending standards and criteria in 2014

This guide is designed to help you understand key aspects of the program, while saving you a lot of time in the process. To accomplish that, we have reduced thousands of pages of documentation into a 60-page handbook.

How to Obtain the Handbook

This e-book can be downloaded in PDF format from Questions about the FHA Handbook can be sent to the publishers of the Home Buying Institute. Please see the “contact” link in the main menu above.