| A FHA loan or Federal Housing Administration Loan | | | | for this kind of loan. |
| was the original residential loan product. The FHA was | | | | 6. An FHA loan can be obtained within two to three |
| created in June 27, 1934 and has since then has | | | | years after the date of your bankruptcy discharge so |
| helped many families achieve their dream of owning a | | | | long as you were able to maintain a good credit since |
| home. This loan started to lose favor in the late 1990's | | | | your were discharged from your debts. |
| when values of home began to inch upward, but it has | | | | 7. As long as you keep your credit in good shape after |
| rebounded nowadays. | | | | a foreclosure, an FHA loan will be available for you |
| Today, FHA does not guarantee or make loans but it | | | | two to three years from the final date of the |
| insures loans. The insurance minimizes or removes the | | | | foreclosure. |
| default risk that lenders face when homebuyers give | | | | 8. There will be lesser or no adjustment rate of interest |
| less than twenty percent in deposit. If you have a less | | | | in this loan as the rates are within.125 percent to that |
| than perfect credit report, this loan might be good for | | | | of a conventional loan. |
| you since this allows loan to people who have financial | | | | 9. Mortgage insurance is added into the loan, this |
| problems. Following are some of the advantages of | | | | means a premium of 1.5 percent added to the loan |
| FHA loans: | | | | balance instead of paid out of your pockets. A small |
| 1. People with bad credit can still avail of this loan easily | | | | portion of the mortgage insurance premium is also |
| than a conventional home loan. | | | | added to your monthly payment, but it is far lesser |
| 2. It requires lesser down payment and low rates of | | | | than private mortgage premiums. |
| interest. For those who do not have a good credit | | | | 10. Since the FHA has been around since 1934, it will |
| rating, they will be required to pay a higher down | | | | continue to protect you and your home. In the event |
| payment in most home loans, but a FHA does not | | | | that encounter difficult times after purchasing your |
| make this demand. | | | | home, it has several options to help keep your home |
| 3. The processing time is faster due to the insurance | | | | and avoid foreclosure. |
| provided by the Federal Housing Administration. | | | | As of January 2009, borrowers can finance at least |
| 4. Lenders are more confident and secure in granting | | | | 96.5 percent of the purchase price and put down 3.5 |
| this loan because of the insurance. | | | | percent. In some situations, when combined with other |
| 5. The down payment will be as low as 3 to 5 percent | | | | kinds of loans, you could have a zero down payment. |