What Is an FHA Loan?
If you’ve been in the market for a new home and have been shopping for mortgages, you’ve likely heard of FHA loans. You’ve probably also heard of the much lower down payment requirements and the low interest rates that are key selling points for FHA-backed mortgages. If you are considering going down the route of an FHA mortgage, it’s important you understand exactly how it works.
About FHA Loans
Simply put, an FHA loan is one that is issued by an FHA-approved lender and insured by the Federal Housing Administration. With a lower minimum down payment and credit score requirements, these loans are intended for low- to moderate-income borrowers who could not otherwise afford a conventional mortgage (one that is not backed by the government).
Understand that the FHA is not actually financing your loan, rather it is insuring the mortgage so your lender is protected in case you are unable to pay back what you owe. The chance of this happening is higher since FHA many of the eligible applicants can be considered high risk borrowers. That’s why the FHA mandates that all borrowers pay a Mortgage Insurance Premiums. These funds are how the agency backs the loans and operates with self-generated income.
About the FHA
IThe Federal Housing Administration, commonly known as FHA, is a government agency created in the 1930s, designed to help include more Americans in the housing market. It operates as a part of HUD, the U.S. Department of Housing and Urban Development. Over the years, the FHA has provided economic stimulation to the country in the form of home and community development. Starting in the 1940s when the agency helped finance homes for veterans returning, till the financial crisis of 2008 when it provided access to mortgage credit when the capital markets had seized up.
Loan Estimate and Closing Disclosure
The FHA's purpose has always been to stimulate the housing industry in the U.S., and in doing so it has benefited local communities in the form of jobs, building suppliers, tax bases, schools, and other forms of revenue.
FHA Loan Articles
June 30, 2022Before you get ready to commit to a home loan application, it’s good to review your circumstances and ask a few basic questions about your loan, your plans, and the home itself. Believe it or not, knowing what type of home loan you need is an important step.
June 16, 2022It’s a great option to consider if you want to build your dream home on your own land instead of buying someone else’s already-lived-in house. FHA One-Time Close mortgages are also referred to as single-close construction loans--you’ll see these terms used interchangeably.
May 7, 2022The appraisal process is a very important part of buying a home. When you are budgeting and planning for your loan, you may want to set aside some extra funds in case there are corrections required as the result of an appraisal.
April 12, 2022There is a major question some new borrowers have about home loans in general, that also applies to construction loans in particular. If you want to apply for an FHA One-Time Close construction loan, there are certain rules about loan funding that you should know about.
March 30, 2022Once you’ve decided that you’ll be purchasing a home, one of the first questions you need to ask yourself is what kind of mortgage you’ll be using to finance it. When it comes to shopping for a home loan, there are a number of options to consider.
March 3, 2022Savvy homeowners make it a point to monitor interest rates so they can take advantage of a drop. Many choose to refinance their mortgages to capitalize on falling rates and lower their monthly payments and save on interest.
