| There are many different loan programs out there for | | | | numbers and so they derived a system that would |
| people to apply for and take advantage of, but when | | | | allow for lenders to give borrowers the money that |
| you consider a conventional home loan program you | | | | they needed with very little money down from the |
| will need to come up with at least five percent of the | | | | borrower. The Federal Housing Administration would |
| purchase price as a down payment before you will be | | | | insure the loans so the lenders would have some |
| considered for the loan. Depending on the purchase | | | | security, so everyone would win. |
| price of the home, five percent, and sometimes as | | | | With an FHA loan you can get into a new home for |
| much as 15 percent can be a lot of money. Most of us | | | | as little as three percent of the purchase price as a |
| don't just have this sort of money lying around, and so | | | | down payment, and in some instances it could be even |
| we assume that we cannot consider home ownership. | | | | less. If you were going to buy a $100,000 home this |
| Luckily, way back in the 1930's the government | | | | means that you could be moving in by putting down |
| realized that most of us don't have this sort of money | | | | just $3,000 and that is much better than the five or six |
| sitting around and they created the FHA loan. This | | | | thousand that you would be putting down on a home if |
| federally insured loan allows for normal, every day | | | | you went with a conventional type of loan. While that |
| people to buy a home for less than the five to 15 | | | | doesn't seem like a huge savings, there are more |
| percent down payment that we would be looking at | | | | savings beyond this. To make the home purchase |
| with a conventional home loan. | | | | more affordable from the start the FHA loan also has |
| The FHA Loan Makes Home Ownership Possible | | | | limits on closing costs so that you cannot be charged |
| The FHA loan dates back to the Great Depression | | | | excessive fees by the lender, the broker, and the |
| when people had very little money and home | | | | realtor but if you have a conventional loan there are |
| ownership was declining for this reason and also due | | | | not any limits as to what you can be charged in the |
| to the fact that many people were losing their homes | | | | way of closing costs. These limits can truly save you |
| to foreclosure. The federal government wanted to | | | | thousands of dollars just in closing costs. |
| boost home ownership and home construction | | | | |