PHFA is actually the funding source for an FHA loan. People go to PHFA because they have the $3,000 second mortgage to help with down money or closing costs. The bank or lender you are working with will underwrite the loan and package it up to go to the state for a final approval. Your lender will close with you and fund the loan, but then immediately sell it to the state and the state will become the services of the loan.
So, in, short, the underwriting guidelines are FHA guidelines, but the state is not necessarily credit score driven and will look at things on a case by case basis. I don't know what funding fee you speak of. Do you mean up front MIP? That has always been a part of FHA loans - but now it is higher. You can finance it itn your loan-most people do.
Hopefully, your loan originator will take some time to discuss these things with you. If you need a lender how is very knowledgeable about PHFA, just let me know and I will give you my best guy, Steve Bamberski of Sovereign Bank.
All the best
Carol Cei, Realtor, ePRO
ReMax Platinum Club
5 Star Professional
ReMax Actioin Realty