FHA for Consumers
Why learn about the Federal Housing Administration (FHA)? - (Top)
FHA may be just the help you need to buy a home, fix up your home, or get cash from your home while still living in it.
What is the Federal Housing Administration? - (Top)
The Federal Housing Administration is a government agency generally known as the "FHA". It provides mortgage insurance on loans made by FHA-approved lenders throughout the U. S. and territories. The FHA insures mortgages on:
- Single family detached homes, condominiums and apartments
- Multifamily homes (such as apartment projects)
- Manufactured homes (prefabricated homes - built in sections
- Hospitals.
It is the largest insurer of mortgages in the world, insuring over 34 million properties since 1934.
What is FHA mortgage insurance? - (Top)
FHA mortgage insurance provides lenders with protection against loss if a homeowner defaults (are unable to pay) on their mortgage loan. The lenders bear less risk because FHA will pay a claim to the lender if the homeowner defaults. Loans must meet certain requirements established by the FHA to qualify for insurance.
Why does FHA mortgage insurance exist? - (Top)
FHA mortgage insurance exists to encourage lenders to finance more homes. Unlike conventional loans that must follow strict underwriting guidelines, FHA-insured loans require very little cash investment (or down payment). There is more flexibility in calculating household income and payment ratios to see if you can afford a home. The homeowner pays mortgage insurance that is typically included in the monthly payment. In most cases, insurance is no longer necessary after five years or when the remaining loan balance is 78% of the property value, whichever is longer.
How is FHA funded? - (Top)
The FHA is the only government agency that operates entirely on self-generated income and costs the taxpayers nothing. The proceeds (money left over) from mortgage insurance paid by homeowners funds the whole program. In this way, FHA provides a huge stimulation to the nation's economy by increasing home and community development. This trickles down to local communities in the form of jobs, building suppliers, larger tax bases, schools and other forms of income.
Why choose FHA? - (Top)
Sometimes, all you need is a little help getting started to buy a home... and with a little help from FHA, a home could be in your future! FHA is "Your Door to Homeownership".
There are a lot of reasons to ask your lender for an FHA loan instead of a conventional or an expensive and risky sub-prime mortgage loan. Why not take advantage of the many benefits and protections that only come with FHA:
- Easier to qualify - Because the FHA insures your mortgage, lenders are more willing to give loans with lower qualifying requirements, so it's easier for you to qualify.
- Less than perfect credit - Even if you have had credit problems, such as bankruptcy, it's easier for you to qualify for an FHA loan than a conventional loan.
- Smaller down payment - The FHA offers a low 3% down payment, and that money can come from a family member, employer or charitable organization. Many other loans don't allow this.
- Lower costs - Many times, FHA loans have competitive interest rates because the loans are insured by the Federal Government. Always compare an FHA loan with other loan types.
- More protection to keep your home - The FHA has been around since 1934 and will continue to be here to protect you when others walk away. Should you encounter hard times after buying your home, the FHA has many options to help keep you in your home and avoid foreclosure.
There is more to buying your home than the monthly house payment. Why not ask for an FHA loan that will help you buy your house and keep it too? Tell your lender you want an FHA loan - FHA is a smart choice for all of these reasons.
What types of loan products does FHA have for you? - (Top)
Buying your first home? FHA might be just what you need. Your down payment can be as low as 3% of the purchase price, and most of your closing costs and fees can be included in the loan.
Want a fixer-upper? FHA has a loan that allows you to buy a home, fix it up, and include all the costs in one loan. Or, if you own a home that you want to re-model or repair, you can refinance what you owe and add the cost of repairs, all in one loan.
Financial help for seniors. Are you 62 or older? Do you live in your home? Do you own it outright or have a low loan balance? If you can answer "yes" to all of these questions, then the FHA reverse mortgage might be right for you. It lets you convert a portion of your equity into cash.
Want to make your home more energy efficient? You can include the costs of energy improvements in an FHA energy-efficient mortgage.
How about manufactured housing and mobile homes?Yes, FHA has financing for mobile homes and factory-built housing. We have two loan products, one for those who own the land that the home is on and another for mobile homes that are, or will, be located in mobile home parks.
Ask an FHA lender to tell you more about FHA loan products.
If you want advice on buying a home, credit issues or reverse mortgages, contact a HUD-approved housing counseling agency or call (800) 569-4287.
