What Is An Fha Mortgage Loan

What Is An Fha Mortgage Loan



What is​ An Fha Mortgage Loan?
The Federal Housing Administration (FHA) is​ operated by the​ Department of​ Housing and Urban Development (HUD) .​
The FHA has the​ responsibility of​ administering the​ government insured home loan programs .​
Like a​ VA loan,​ the​ FHA does not actually lend the​ money for the​ home to​ the​ borrower but instead insures the​ loan so that more lenders will be willing to​ take on​ the​ risks of​ granting the​ loan to​ a​ first time home buyer.
There are many different FHA home loan programs available .​
One of​ the​ most popular is​ the​ 203(b) home loan .​
This particular program is​ a​ fixed rate loan for owner-occupied homes and only requires a​ minimum of​ 3% down from the​ borrower .​
In addition,​ this particular loan program allows the​ use of​ 100% of​ the​ closing money to​ be a​ gift from a​ government agency,​ family member,​ or​ non-profit organization .​
Overall,​ the​ benefits to​ using an​ FHA home loan are that the​ credit requirements for a​ first-time buyer are less than what might be needed for traditional type loans .​
In other words,​ a​ person or​ family with some minor credit problems in​ the​ past would find it​ easier to​ get a​ home loan through an​ FHA home loan program than if​ they tried to​ go it​ alone .​
FHA home loans are assumable,​ which allows the​ buyer to​ take over a​ previous mortgage without the​ additional cost of​ obtaining a​ fresh,​ new loan .​
Another important factor is​ that the​ seller or​ lender must pay for part of​ the​ closing costs (called non-allowable costs) while the​ buyer's allowable costs can be infused,​ in​ part,​ into the​ loan.
Most,​ if​ not all,​ mortgages require monthly mortgage insurance but the​ monthly mortgage insurance premium for an​ FHA loan is​ less expensive than what is​ commonly found in​ traditional loans .​
An FHA loan also allows for a​ higher debt ratio than most traditional loans .​
Individuals and families who earn a​ lower income will find this an​ important factor when shopping for a​ home loan.
While there are many programs available through the​ FHA for the​ first-time buyer,​ there are also programs for those who have purchased homes in​ the​ past .​
There are also some refinance programs available .​
Home shoppers should be aware,​ however,​ that the​ FHA will limit the​ loan size according to​ the​ area of​ the​ country in​ which you​ live or​ wish to​ purchase the​ home .​
You should visit the​ FHA website to​ learn what the​ cap is​ for your particular area,​ as​ well as​ to​ learn of​ any other restrictions that may apply to​ you.
The official website is​ also a​ great place to​ learn more about some of​ the​ other programs that are available .​
Some of​ the​ more commonly used programs include:
Standard fixed rate (FHA 203b)
Rehab Loan (FHA 203k)
Condominium Loans (FHA 234c)
FHA adjustable rate mortgage (FHA 251)
FHA Hybrid Adjustable Rate Loans
FHA 2-1 Buy Down
Energy Efficient Mortgage Programs
Reverse Mortgages for senior citizens
All of​ these FHA mortgage loan programs can help new or​ existing home owners to​ get good deals with lenders .​
They are certainly worth looking into.




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