| Federal Housing Administration (FHA) home loans are | | | | protection for you and your family. Having an |
| a great option for many homebuyers and | | | | assumable loan at a good interest rate would be part |
| homeowners looking to purchase or refinance. FHA | | | | of a good plan for selling your house in the future |
| home loans are specifically useful to borrowers who | | | | especially if the interest rates have gone up. |
| cannot make a big down payment, who want low | | | | If refinancing a home, the current loan DOES NOT |
| monthly payments, whose credit is not great and | | | | have to be an FHA loan. Refinancing an existing FHA |
| qualifying for a conventional loan is difficult for them. | | | | home loan is actually called a streamline refinance. |
| Congress created the FHA in 1934 and it became part | | | | FHA loans are for all homeowners that are buying, or |
| of the Department of Housing and Urban Development | | | | refinancing their home. FHA mortgage loans assist |
| (HUD) in 1965. The FHA is not a lender. The FHA is the | | | | existing homeowners to convert their ARM to a |
| largest insurer of mortgages in the world. Lenders are | | | | reduced rate refinance loan that ensures a set fixed |
| insured by the FHA against losses as a result of a | | | | payment every month until the mortgage is paid off. |
| homeowner defaulting on their mortgage loan. It insures | | | | With FHA refinancing, homeowners can count on |
| single and multifamily homes including manufactured | | | | market-low mortgage rates to pull cash out up to 85%, |
| homes and hospitals. The FHA is the only government | | | | and in some cases 95% loan to value. FHA loans are |
| agency that does not cost the taxpayers anything | | | | for all homeowners that are buying, or refinancing their |
| operating entirely from the proceeds from its | | | | home. |
| mortgage insurance which is initially part of the | | | | Each type of FHA loan is unique and must be applied |
| mortgage payment. | | | | for individually. Attention is given to one's ability to make |
| This program allows a first time home buyer, who | | | | payments and handle life's expenses. Less attention is |
| might otherwise not qualify for a home loan to obtain | | | | given to FICO scores when applying for an FHA loan |
| one because the risk is removed from the lender by | | | | than with a conventional loan. Qualifying for an FHA |
| FHA who insures the loan. With the recent subprime | | | | home loan is done by using a set of debt-to-income |
| lending collapse, the FHA home loans have become | | | | ratios that are a bit more in your favor than those |
| cool again, as mortgage lenders and brokers are | | | | used for conventional home loans. |
| flocking to the latest FHA loan programs. FHA has | | | | The following two FHA loan requirements are |
| been around for decades, and there are many | | | | important for qualifying: Housing expenses should not |
| innovative programs to help different segments of the | | | | exceed 29% of your gross income; total indebtedness |
| population to realize the dream of home ownership. A | | | | should not exceed 41% of your income. FHA home |
| common misconception is that FHA home loans are | | | | loans require a smaller down payment as well. Down |
| for first time homebuyers. The fact is you can only | | | | payments for FHA home loans are low, generally 5% |
| have one FHA loan at a time whether it's your second | | | | or even as low as 3.5%. The finance package in a |
| home or fifth. The mortgage limits for FHA home loans | | | | nutshell is: FHA insurance + lender financing = FHA |
| are set on an area-by-area or county-by-county basis. | | | | loan. Ask your lender for assistance in learning which |
| This type of insurance is an attractive benefit for FHA | | | | FHA mortgage is right for you. |
| approved and authorized lenders. If the homeowner | | | | FHA home loans are available in rural and urban areas. |
| defaults, the lender gets its money from the FHA. The | | | | FHA home loans are not loans granted by the |
| lender or broker works with prospects to qualify their | | | | government, but FHA home loans are mortgage loans |
| loan application to FHA guidelines for approval for this | | | | that are guaranteed by the Federal Government. FHA |
| insurance for the loan. | | | | home loans are generally offered at reasonable |
| FHA loan guidelines also provide attractive benefits to | | | | interest rates, and guarantee the mortgage company |
| home buyers as qualification is usually less stringent | | | | that the loan will be paid. So whether you are |
| than conventional loans. Plus, all FHA home loans are | | | | refinancing, buying your first home or your fifth, try out |
| FULLY assumable, adding one more layer of | | | | FHA. |