What’s an FHA Loan?
The FHA was created by Congress in 1934 and then became a division of the Department of Housing and Urban Development (HUD) in 1965. FHA offers home buying programs to low and moderate-income families, which makes it an autonomous organization that helps people buy homes. This program allows a first-time home buyer to purchase a house with their low down payment. The borrower has to cover defaulted mortgage payments. The lender is not legally obligated to cover the settlement cost in the event of a default. Nowadays, the size of a down payment and the interest rate doesn't matter as much because most mortgages are insured by the Federal Housing Association. It's actually the largest insurer in the world. The FHA provides mortgage insurance to lenders when homeowners default on mortgages. We can protect your single-family home or larger buildings against fires, whether they be man made (i.e. lightning) or natural. This includes houses made of metal and wood, as well as hospitals etc. The FHA is an independent entity that does not rely on taxpayer funds to operate.
FHA Loans Types
FHA loans vary in many ways. Some are mortgages, some are "shared equity" loans, and others have additional requirements such as a down payment or credit score. Before applying, make sure you can afford monthly payments and other living expenses. Your FICO score does not affect your chances of getting a home loan with an FHA loan. One way to qualify for an FHA loan is by using a set of debt-to-income ratios that is more lenient than those of conventional loans.
Are you looking to apply for an FHA Loan? Contact one of our specialists today and we'll be happy to answer your questions.
