For a borrower to finance a single-family home with an FHA loan, what must be true?

To finance a single-family home with an FHA loan, it is essential that the borrower intends to occupy the property as their principal residence. FHA loans are designed to assist individuals and families in achieving homeownership, particularly those who may not qualify for conventional loans. One of the core requirements of FHA financing is that the borrower must use the property as their primary home rather than as an investment or for rental purposes. This owner-occupancy requirement ensures that the FHA can promote stable housing and community involvement.

While good credit can enhance a borrower's chances of securing an FHA loan and the property must meet certain standards for quality and safety, neither is a strict requirement like the intent to occupy. Additionally, there is no mandate that the property must be in an urban area or that the home must be new; FHA loans can be used for a wide range of properties, including existing homes and those in rural settings, provided they meet the FHA's eligibility criteria.