FHA guidelines also allow for greater flexibility with regards to credit history and qualifying ratios. The maximum FHA loan amount varies, depending upon where the property is located. FHA Fixed Rate - Available in 15 or 30 year terms. FHA A.R.M. - Adjustable Rate Mortgage. Offers a lower initial rate that is subject to change annually.
Adjustment is based on the current index at the time of the adjustment period.
The index is then added to the margin, typically 2.75. The index plus the margin would total 9.00. Applicant must qualify at 2nd year rate. Offers the lower initial payment of an A.R.M., but the guaranteed cap of the end rate. Applicant qualifies at start rate.