For a FHA loan, your monthly housing costs should not exceed 29% of your gross monthly income. All income that you have needs to be verifiable. (This can even include seasonal and/or part-time employment.) Total housing costs include mortgage principal and interest, property taxes, and insurance (PITI). Your total monthly costs, adding PITI and long term debt, should be no more than 41% of your gross monthly income. Long term debt includes such things as car loans and credit card balances.
Your FHA loan will also carry a Mortgage Insurance Premium (MIP). There is an initial 1.5% MIP charge that can be financed with the mortgage and a monthly payment (0.5% per year - paid monthly) which is lower than what a conventional loan scenario PMI would be required. Unlike conventional loans, the MIP will remain with the FHA loan for the life of the loan.
One thing that the buyer must have is a minimum 3% down payment. The seller can contribute up to 6% of the SETTLEMENT COSTS which cannot include the mandatory 3% down payment. The entire down payment can be gifted or borrowed from a relative or a close friend - on most conventional loans the down payment must be sourced and seasoned. Another source of the 3% down payment can be an assistance program or grant. You should ask your mortgage broker if they work with some sort of down payment assistance program (or gifting program). There are several of these programs through out the country, depending on your location.
FHA loans may be assumed so long as the assuming party qualifies. Any FHA loan originated prior to December 1, 1986, are simply assumable; i.e. - the purchaser does not need to formally qualify for the loan. Loans are assumed at the note rate under which they were originally originated. The exception being on ARM's, in which case are assumed at the loan's current interest rate.
In years past, the annual mortgage insurance never went away. As of January 1, 2001 typical guidelines for non FHA mortgage insurance were enacted so that the MI dropped off after the homeowner reached a 78% equity position OR after a minimum of 5 years of paying the MI.
In 2006, the FHA is re-examining it's lending limits, guidelines and policies in regards to property conditions in an attempt to become a major player in the home loan market for home buyers with little money to put down and some past credit difficulties.