FHA Mortgage Loans

FHA Purchase | FHA Refinance | FHA 203K Rehab Loans | FHA 5/1 ARM
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What you should know about FHA

FHA insured mortgages can be used for many different purposes. Whether you are buying your first home, looking refinancing your current home or even if you have found a home that needs rehabilitation work— the FHA mortgage program can help you.

What is the Federal Housing Administration?

The Federal Housing Administration, generally known as “FHA”, provides mortgage insurance on loans made by FHA-approved lenders throughout the United States and its territories. FHA insures mortgages on single family and multifamily homes including manufactured homes and hospitals. It is the largest insurer of mortgages in the world, insuring over 34 million properties since its inception in 1934.

What is FHA Mortgage Insurance?

FHA mortgage insurance provides lenders with protection against losses as the result of homeowners defaulting on their mortgage loans. The lenders bear less risk because FHA will pay a claim to the lender in the event of a homeowner’s default. Loans must meet certain requirements established by FHA to qualify for insurance.

Why does FHA Mortgage Insurance exist?

Unlike conventional loans that adhere to strict underwriting guidelines, FHA-insured loans require very little cash investment to close a loan. There is more flexibility in calculating household income and payment ratios. The cost of the mortgage insurance is passed along to the homeowner and typically is included in the monthly payment. In most cases, the insurance cost to the homeowner will drop off after five years or when the remaining balance on the loan is 78 percent of the value of the property -whichever is longer.

How is FHA funded?

FHA is the only government agency that operates entirely from its self-generated income and costs the taxpayers nothing. The proceeds from the mortgage insurance paid by the homeowners are captured in an account that is used to operate the program entirely. FHA provides a huge economic stimulation to the country in the form of home and community development, which trickles down to local communities in the form of jobs, building suppliers, tax bases, schools, and other forms of revenue.

The history of FHA

Congress created the Federal Housing Administration (FHA) in 1934. The FHA became a part of the Department of Housing and Urban Development’s (HUD) Office of Housing in 1965.

When the FHA was created, the housing industry was flat on its back:

During the 1940s, FHA programs helped finance military housing and homes for returning veterans and their families after the war.

In the 1950s, 1960s and 1970s, the FHA helped to spark the production of millions of units of privately-owned apartments for elderly, handicapped and lower income Americans. When soaring inflation and energy costs threatened the survival of thousands of private apartment buildings in the 1970s, FHA’s emergency financing kept cash-strapped properties afloat.

The FHA moved in to steady falling home prices and made it possible for potential home buyers to get the financing they needed when recession prompted private mortgage insurers to pull out of oil producing states in the 1980s.

By 2001, the nation’s home ownership rate had soared to an all-time high of 68.1 percent as of the third quarter that year.

The FHA and HUD have insured over 34 million home mortgages and 47,205 multifamily project mortgages since 1934. FHA currently has 4.8 million insured single family mortgages and 13,000 insured multifamily projects in its portfolio.

In the more than 60 years since the FHA was created, much has changed and Americans are now arguably the best housed people in the world. HUD has helped greatly with that success.

Want more information now? Speak with one of our FHA mortgage specialists to learn how FHA financing can benefit you and get started now!

Financing Your FHA Loan

Currently, FHA financing requires a 3.5% down payment minimum to obtain a home loan (purchase) and can go to 85% cash out on a refinance and up to 97.75% of your home value if you do a standard rate and term refinance.  Even better- you can use the FHA 203k program to finance the remodeling, rehabilitation or renovation of your existing home or the home you are going to purchase and the best part is….you can do so using up to 110% of the completed value of your home.

FHA Home Loan Guarantee Program

FHA Loans and Credit Issues

FHA loans are a great way for individuals and families to purchase a home with low down payment and favorable mortgage loan terms. However, it is important to consider your credit history before you apply for a FHA loan. Before you can apply for a FHA loan, a mortgage specialist will examine your credit history for any obstacles that would cause you to be denied a loan.

Some of the credit requirements the FHA has for loan approval include:

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