FHA Loans
Why not let the power of the federal government help you buy your own home? FHA loans allow people to borrow money for the purchase of a home that they might otherwise not be able to afford.
The program was created during the Depression of the 1930s when the rate of foreclosures was very high. It was created to provide lenders with more insurance when providing housing opportunities to low income families.
FHA loan programs were and still are subsidized by government, but the original intent was to make them self-supporting with insurance premiums paid by the borrowers.
Over time, private mortgage insurance companies assumed the rule of insuring loans, and now the FHA primarily serves people who can’t afford a normal down payment, or do not qualify for PMI (private mortgage insurance).
FHA's mortgage programs are designed to lower the cost of a mortgage loan. FHA mortgage insurance also encourages lenders to make loans to creditworthy borrowers and projects that might not be able to meet conventional underwriting requirements.
They protect the lender against loan default on mortgages for properties that meet certain guidelines. These properties include manufactured homes, single- and multi-family dwellings, and some health related facilities.
On 1 to 4 unit properties your down payment can be as low as 3% of the home’s purchase price with an FHA loan. Most of your closing costs and fees can also be included in the loan instead of paid out of pocket.
The FHA also insures adjustable rate mortgages (ARMs), which can be very beneficial to any homeowner when interest rates are high. This allows borrowers to obtain mortgage financing that is more affordable due to a lower initial interest rate. This interest rate is adjusted periodically, based on certain market indices chosen by the FHA, and can increase or decrease over the life of the loan.
The FHA also assists in financing mobile homes and manufactured housing. They have a loan program for those who own the land that the home is on as well as another for mobile homes that are in mobile home parks.
For savings over the life of your loan, and home, you can include the costs of energy efficiency improvements into an FHA “energy efficient mortgage”. Click here to get detailed information about this FHA loan program.
If you are you 62 or older, live in your home and either own it outright or have a low mortgage balance, FHA Home Equity Conversion Mortgages (Reverse Mortgage) can supplement you current income. Our Reverse Mortgage pages are full of valuable information on these programs. Click here to learn more or find out if you qualify for a HUD Reverse Mortgage.
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