What is an FHA 203(b) Loan?

The FHA provides mortgage insurance for properties that consist of detached or semi-detached property dwellings, as well as row homes and townhouses, and individual units in condominium projects that meet FHA approval.

Because FHA only insures owner-occupied principal residences, mortgages on commercial properties (including hotels, boarding houses, bed-and-breakfasts, private clubs, and university fraternity/sorority houses) are not eligible for assistance.

The FHA is not a mortgage lender, but an insurer of loans from private lenders that abide by FHA regulations. To obtain an FHA-insured loan, you should contact multiple lenders and/or mortgage brokers to find out if they will originate an FHA loan. Comparing different lenders is important, since each one will offer different rates and conditions.

Once you’ve chosen a potential lender, they will perform a risk assessment to determine your ability to pay. This includes a debt-to-income ratio analysis as well as payment history on other debts, and other factors that will help the lender decide if you are eligible for a loan.