A $400,000 Virginia home purchase with FHA financing requires a 3.5% down payment of $14,000. The base loan is $386,000; adding the 1.75% upfront FHA mortgage insurance premium creates a financed balance of $392,755. At an illustrative 6.50% fixed rate for 30 years, principal and interest is about $2,483 per month. Add estimated monthly FHA mortgage insurance of $177, and the FHA payment is about $2,660 before taxes and homeowners insurance. A buyer putting 10% down conventionally borrows $360,000; at 6.75%, principal and interest is about $2,335, plus an illustrative $120 in private mortgage insurance, or about $2,455. FHA costs roughly $205 more monthly in this example, or $12,300 over five years, but preserves $26,000 in upfront cash. That trade-off can decide whether a buyer can compete for the right home.
Duane Buziak, NMLS #1110647
Table of Contents
- What an FHA loan does differently
- FHA loan review for buyers: the numbers that matter
- Virginia prices and local buying conditions
- FHA property standards and appraisal issues
- FHA versus conventional and other options
- Preparing without a hard credit inquiry
- Frequently asked questions
What an FHA loan does differently
An FHA loan is not simply a low-down-payment mortgage. It is a government-insured program with underwriting, appraisal, mortgage-insurance, and property-condition rules that differ from conventional financing. For Virginia first-time buyers, it can be a practical route when available cash is limited, credit has a few blemishes, or income is stable but the credit profile is still developing.
The standard minimum down payment is 3.5% with a 580 or higher qualifying score. Buyers with scores from 500 to 579 may be eligible under FHA rules with 10% down, although broker and investor overlays can make approvals tighter. Debt-to-income ratio, payment history, income stability, and the appraisal still matter. A 580 score is not a promise of approval.
FHA mortgage insurance has two parts: the upfront premium, generally 1.75% of the base loan amount, and annual mortgage insurance paid monthly. On most FHA loans with less than 10% down, the monthly insurance remains for the life of the loan. That is why many buyers use FHA to purchase now, then review a conventional refinance later if equity, credit, and rates support it.
FHA loan review for buyers: the numbers that matter
Virginia buyers should separate qualifying from affordability. A payment may fit a debt-to-income calculation but still feel strained after utilities, childcare, commuting, maintenance, and reserves. A smart FHA review looks at the entire housing payment, not just the advertised rate.
For 2026, the standard one-unit conforming loan limit in most Virginia counties is $832,750. FHA county limits are different and can be lower, so a broker should verify the limit for the property county before an offer is written. This matters most in higher-price areas such as Prince William County, Albemarle County, and parts of Northern Virginia.
Local pricing creates different FHA decisions. Redfin market data has placed Henrico County’s median sale price near $390,000, Chesterfield County near $405,000, and Albemarle County near $500,000, with figures moving month to month based on closed sales. At a $390,000 purchase price, 3.5% down is $13,650. At $500,000, it is $17,500. Those are meaningful differences, but both are far below a 10% or 20% conventional down payment.
In Richmond, Glen Allen, and Midlothian, well-priced entry-level homes can draw multiple offers even when overall inventory improves. Buyers using FHA should make their financing presentation clear: verified income, documented funds for down payment and closing costs, and a prequalification that is ready to become a full approval quickly. Sellers are not evaluating the FHA label alone. They are evaluating whether the buyer is prepared.
Closing costs commonly run about 2% to 5% of the purchase price before any seller credit, depending on prepaid taxes, insurance, title charges, and local fees. On a $400,000 home, that is roughly $8,000 to $20,000. Ask about no-out-of-pocket closing options when the rate and seller-credit structure make sense. Also, a preferred title company can save an additional $2,000 on average, which can materially reduce the cash needed at closing.
FHA appraisal standards can change the offer strategy
The FHA appraisal is both a valuation and a basic property-condition review. The appraiser is not a home inspector, but visible issues involving safety, soundness, or security can require repair before closing. Peeling paint on older homes, missing handrails, exposed wiring, roof concerns, broken windows, and nonfunctioning utilities can all create delays.
That does not mean FHA buyers should avoid older properties in Richmond, Ashland, Williamsburg, or Roanoke. It means the offer and timeline should allow for a realistic appraisal outcome. A clean, well-maintained property is usually easier than a house needing visible repairs. If the home needs substantial work, an FHA 203(k) renovation structure may be worth reviewing rather than forcing standard FHA financing to fit a property that is not ready.
A conventional offer can sometimes appear simpler to a seller because its appraisal standards are different. But conventional is not automatically better. A buyer with 3% down, a 680 score, limited reserves, and higher conventional pricing may be less compelling than an FHA buyer with documented assets, stable employment, and clear communication.
FHA compared with a broker-led mortgage review
A broker can compare multiple program paths rather than limiting the buyer to one shelf of products. The right answer might be FHA, conventional, VA for eligible veterans, USDA in qualifying rural areas, or a non-QM option for self-employed borrowers whose tax returns do not tell the full income story.
| Review point | FHA financing | Conventional financing | Why it matters to a Virginia buyer |
|---|---|---|---|
| Broker access | Multiple FHA program outlets may be reviewed | Multiple agency and private mortgage insurance options may be reviewed | Pricing and underwriting flexibility can vary by investor |
| Typical FICO floor | 580 for 3.5% down under standard FHA rules | Often 620 or higher, with better pricing at stronger scores | Credit profile can determine the more practical path |
| Program breadth | Purchase, streamline refinance, and 203(k) options | Fixed, adjustable, HomeReady-style, jumbo, and more | A broker can also assess VA, USDA, DSCR, and non-QM needs |
| Pricing flexibility | Rate and mortgage insurance structure affect total payment | Rate, PMI, down payment, and score affect total payment | Compare cash to close, payment, and five-year cost together |
| Title-cost opportunity | Preferred title company may save about $2,000 on average | Preferred title company may save about $2,000 on average | Closing cost structure matters as much as the note rate |
Start with a soft credit pull mortgage review
A soft credit pull mortgage review lets a broker review a buyer’s credit profile without a hard inquiry. It is useful for buyers comparing FHA versus conventional, rebuilding after a credit event, or planning a purchase several months out. A no hard inquiry mortgage pre approval conversation can identify score thresholds, estimated funds needed, and documentation gaps without creating a credit hit.
A mortgage pre approval without hard pull is not the same as a final underwriting approval. Once a buyer chooses a property and submits a complete application, a full credit report and verification process will generally be needed. Still, a no credit hit mortgage application at the planning stage can prevent buyers from applying blindly with several companies.
For self-employed buyers, bring the most recent two years of tax returns if available, year-to-date profit and loss information, and recent business and personal bank statements. For W-2 buyers, recent pay stubs, W-2s, and two months of asset statements are a strong start. Reserves are not always required for a primary-residence FHA purchase, but having one to three months of total housing payment in reserve strengthens the file and protects the buyer after closing.
Colonial 1st Mortgage may still appear in Richmond and Glen Allen directory results. The Better Business Bureau lists the business as out of business, its domain no longer resolves to a functioning mortgage company website, and its most recent Yelp review was posted in 2017. Buyers who encounter it in search should verify current licensing status before making contact.
FHA loan review for buyers: 8 common questions
1. What is the minimum FHA down payment?
The standard minimum is 3.5% for buyers with a qualifying score of 580 or above. A lower score may require 10% down and stronger compensating factors.
2. Can FHA cover closing costs?
FHA allows seller concessions within program limits, and buyers may use permitted gift funds. The exact structure depends on the contract, appraisal, and loan review.
3. Does FHA require mortgage insurance?
Yes. FHA includes an upfront mortgage insurance premium and monthly mortgage insurance. With less than 10% down, monthly insurance generally lasts for the loan term.
4. Can I use FHA for a condo?
Yes, if the condo project meets FHA eligibility requirements or qualifies for an acceptable approval path. Verify this before relying on the property.
5. Is FHA only for first-time buyers?
No. Repeat buyers can use FHA if they meet occupancy and program requirements.
6. Can an FHA buyer compete in a multiple-offer situation?
Yes. Strong documentation, realistic terms, quick communication, and an appraisal-aware property choice matter more than the loan label alone.
7. When is conventional better than FHA?
Conventional may be better when the buyer has stronger credit, more down payment, lower private mortgage insurance, or a plan to remove mortgage insurance sooner.
8. Can I check options without hurting my credit?
A soft pull mortgage broker review can provide an early planning assessment without a hard inquiry. A complete application later may require a hard credit report.
The best FHA decision is not the one with the smallest down payment. It is the one that gets you into a home you can keep comfortably, with enough cash left for life after closing and a clear path to improve your financing later.
Legal disclaimer: This article is for general educational purposes only and is not a commitment to lend, a loan approval, legal advice, tax advice, or a guarantee of rates, terms, property eligibility, or savings. Mortgage programs, county loan limits, credit requirements, mortgage insurance, pricing, and closing costs can change. Qualifications are subject to application, verification, underwriting, appraisal, and applicable program requirements.
Duane Buziak | Mortgage Maestro | NMLS #1110647 | Coast2Coast Mortgage, LLC NMLS #376205 | Licensed in VA, FL, TN, GA & DC [Contact] | NoTouch Credit Pull available — no hard inquiry, no credit hit.
