FHA Loans

FHA Mortgage Loans

In 1934, the Federal Housing Administration was created to bring strength to the US housing market and functions today in much the same fashion it did since its inception over 80 years ago. FHA mortgages are government insured loans that allow people to afford moderately priced houses with low down payments. This means that the loans will be insured, so that the lender can recoup any losses if the borrower unexpectedly defaults. Click here for more resources and information on government insured loans.

FHA loans can have down payments as low as 3.5% and have been even lower in recent times. HUD and the FHA have worked together to insure over 34 million home loans for multi-family construction projects since their partnership began. The FHA alone insures just under 5 million single family mortgage home loans, and 13,000 multifamily mortgage loans. Federal Housing Administration loans are great for single families who have less money for a down payment and/or imperfect credit.

Benefits of FHA Loans

From lower interest rates to lower down payments, millions of homebuyers are taking advantage of the opportunity to take out FHA loans.  FHA loans, USDA rural loans and VA loans boast the lowest down payments of all loans. Many homeowners are able to afford homes when they otherwise couldn't, due to strict credit guidelines or hefty down payments. FHA also allows borrowers to have less than perfect credit.  As long as you are three years out of foreclosure and your credit has been stable since then, you have a good chance at getting a loan provided everything else is in order.

Requirements for an FHA Loan

You should always do a little research on your own and consult a real estate professional to learn about which home loan programs you may qualify for. Since FHA mortgages are designed to help low to moderate income families afford homes, you must ask for an amount that falls within the maximum loan range. This amount varies depending on where the loan is being given out. Visit The Housing Hour for more advice on the maximum loan amounts in your area. There is no minimum credit score requirements for FHA mortgages, but you do need to be able to demonstrate the ability and to pay bills on time, and have no major credit problems in the past few years. Also, make sure your debt-to-income ratio is under 45% and have enough cash to make the 3.5% down payment.