What is the current maximum loan to value ratio for FHA loans?

FHA loans have specific guidelines regarding the loan-to-value (LTV) ratio to help borrowers secure financing with lower down payments. The maximum LTV ratio for FHA loans is set at 96.5%. This means that a borrower can finance up to 96.5% of the property's appraised value or purchase price, whichever is lower. This aspect is particularly beneficial for first-time homebuyers who might not have substantial savings for a down payment.

By allowing for a higher LTV, the FHA program expands access to homeownership for a broader range of borrowers, especially those who may be lower-income or have less-than-perfect credit histories. Therefore, the 96.5% LTV reflects the FHA's goal of promoting homeownership while still managing risk in its insurance programs.