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FHA Loans Kansas City

What is an FHA loan?

FHA loan in Kansas City is a popular choice for first-time homebuyers and those with low credit scores. They offer as little as a 3.5% down and lenient credit requirements and low-interest rates. FHA loans are insured by the Federal Housing Administration (Housing and Urban Development (HUD), which protects lenders should the borrower default on their loan.

As a result, FHA loans are often available to borrowers who would not be able to qualify for a conventional mortgage. If you’re looking for a Kansas City FHA loan, you should know a few things. First, FHA loans are only available for homes used as your primary residence.

Second, you’ll need to have a steady income and good credit to qualify. Finally, you’ll need to pay private mortgage insurance (PMI) if you put less than 20% down on your home. If you’re ready to take the first step toward buying your dream home, an FHA loan might be right.

How to find the best FHA Lenders

What are the benefits of FHA Loan?

Below are the benefits of FHA loans:

  • Low down payment as low as 3.5%
  • Fixed and Adjustable-Rate Mortgage available
  • Offer a low mortgage interest rate
  • Terms from 10 to 30 years
  • A lower credit score is acceptable
  • Offers a low-down-payment
  • Available for Home Purchase and Mortgage Refinance transactions
  • Owner Occupied residences only

Suprising benefits of FHA Loans

FHA Mortgage Rates

Fixed Rate: Metropolitan Mortgage offers loan terms for 30-year and 15-year fixed-rate mortgage options. Both loan terms have the same interest rate stability for the life of the loan.

However, with the shorter loan term comes higher monthly payments. It gives you a faster way to build up home equity. As a result, you can use this higher equity as a down payment when you move to your next home.

See how they compare to a conventional loan: FHA vs. Conventional Loans

Adjustable Rate: An FHA adjustable-rate mortgage (ARM) lets homeowners pay a low introductory interest rate for the first few years, resulting in a cheaper mortgage payment. In addition, these types of loans are best for shorter terms of home ownership.

FHA mortgage rates

FHA Loan Requirements Kansas and Missouri

What is the minimum down payment for an FHA loan?

An FHA loan allows you to finance up to 96.5% (loan-to-value) of the appraised value in Kansas and Missouri. The 3.5% down payment requirement can come from a gift or a grant, making FHA loans an attractive option for first-time home buyers.

See FHA Loan Calculator

Eligible sources for the down payment

The down payment must come from the borrower’s funds or Gift funds. Therefore you can’t take out a loan for the down payment.

Gift funds can come from the FHA borrower’s family member, employer or labor union, or close friend with a clearly defined and documented interest in the borrower. In addition, a charitable organization, governmental agency, or public entity has a program providing homeownership assistance to low- or moderate-income families or first‐time homebuyers.

Cash on Hand is not an acceptable source of donor gift funds. You must document the Gifts funds with a satisfactory executed gift letter and evidence of transfer from the donor to the borrower. A copy of the donor’s bank statement also shows the withdrawal from the donor’s account.

2024 FHA Loan Limits

The maximum FHA loan limits for the Kansas City area. Here is a detailed list of Kansas FHA loan limits by County and Missouri FHA loan limits by County.

  • $498,257 loan amount for a one-family property
  • $637,950 loan amount for a two-family property
  • $771,125 loan amount for a three-family property
  • $958,350 loan amount for a four-family property

FHA Minimum Credit Score

The minimum credit score needed for FHA loans is 640. The middle of the three FICO scores (Experian, Trans Union, and Equifax) are used to meet the minimum credit score requirement.

Debt-to-Income Ratios

A debt-to-income ratio (DTI) is used to determine qualification. This DTI is the total monthly housing expense plus monthly debt obligations (like credit cards and student loans) divided by the total gross monthly income. This Debt-to-income ratio is one-way mortgage lenders measure your ability to manage the payments. Generally, the maximum DTI is 45% and up to 55% with compensating factors.

Excellent credit scores, job stability, and cash reserves are compensating factors. Get your FHA approval today to see how much you can qualify for.

Mortgage Insurance Premiums (MIP) for FHA Insured Loans

You will have to pay two FHA mortgage insurance premiums: an upfront premium and a monthly premium.

The FHA upfront mortgage insurance premium is 1.75% of the loan amount.

You will also have to pay a monthly FHA mortgage insurance premium, usually 0.85% of the loan amount divided by 12 (months). The FHA monthly mortgage insurance premium can be as high as 1.35% of the loan amount, depending on your down payment and how long you have the loan.

FHA loans are great for people who don’t have a lot of money for a down payment, but they require you to pay both an upfront and monthly mortgage insurance premium.

Eligible Properties

Many types of properties are eligible for this type of mortgage, for example:

  • Primary residence single-family homes – 1 to 4 unit
  • Attached and Detached Planned Unit Developments (PUDs) typically comprise detached homes within a homeowner’s association.
  • Condominiums
  • Manufactured homes (loan limitations apply)

FHA Maximum interested party contributions

The maximum contribution you can receive is 6% of the property’s sales price. The contributions can only be used towards your actual closing costs, prepaid expenses, discount points, and other financing concessions.

FHA streamline-refinance

Streamline refinances of an existing FHA loan require limited credit documentation and underwriting. Therefore, this type of FHA refinance is available under credit qualifying and non-credit qualifying options. “Streamline refinances” refers only to the amount of documentation and underwriting the lender must perform and does not mean that there are no costs involved in the transaction.

The basic streamline requirements in Kansas City:

  • The mortgage to be refinanced must already be FHA insured.
  • The mortgage to be refinanced must be current (not delinquent).
  • A refinance results in a net tangible benefit to the borrower.
  • May not take cash out above $500 on mortgages refinanced using the FHA mortgage refinance process.

FHA mortgage lenders may offer these refinances in several ways. Some FHA lenders offer a “no-cost” refinance (no out-of-pocket expenses to the borrower). This is done by charging a higher mortgage rate of interest on new home loans rather than if the borrower financed or paid the closing costs in cash.

The lender receives a premium from the higher mortgage rate, which enables them to pay the closing costs incurred on the transaction. Department of Housing does not allow lenders to include closing costs in the new mortgage amount of a streamlined refinance.

Investment property (properties the borrower does not occupy as their principal residence) may only be refinanced without an appraisal.

10 Things You Should Know About FHA Loans

How do I apply for an FHA Mortgage?

To see if you qualify for an FHA loan, you can apply online and receive your mortgage pre-approval letter within one business day. Get started on your Metropolitan Mortgage application today:

Apply Now >

Have Questions About FHA Mortgages?

Metropolitan Mortgage Corporation is a family-owned mortgage lender based in Overland Park, KS. We’re committed to helping our clients with the right mortgage solution, whether you’re buying their first home or your tenth. When looking for the best FHA lenders in Kansas City, look no further than Metropolitan Mortgage Corporation.

Contact our team to learn more about FHA Loans and explore other home loan programs. We can help you achieve your homeownership goals.

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