What is the purpose of the FHA loan program?

FHA provides mortgage insurance to purchase or refinance a principal residence. The mortgage loan is funded by a private lending institution, such as a mortgage company, bank, savings and loan association and the mortgage is insured by the (FHA) Federal Housing Administration.

What are the eligibility requirements?

• The borrower must be able to meet the minimal standards for FHA credit qualifications.
• The borrower is eligible for approximately 97% financing. The borrower is able to finance the (UFMIP) upfront mortgage insurance premium into the mortgage. The borrower will also be responsible for paying the (MIP) mortgage insurance premium included in the monthly payments
• Eligible properties are 1-4 unit homes.

How FHA Loans Work?

FHA does not make loans or guarantee loans. FHA insures loans made by private lending institutions. The insurance paid for by the borrower removes or minimizes the default risk that lenders face when extending credit to buyers put down less than 20 percent down payment. Without further approval from FHA, its approved lenders are authorized to:

• Take  and approve home loan applications
• Process loan applications
• Underwrite and close the loan

Why ask for an FHA home loan?

There are many advantages to why you should ask for an FHA loan instead of accepting 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 home loans?

• Easier to Qualify – FHA loans are not credit score driven and because FHA insures your mortgage, private lenders are more willing to give loans to homebuyers with lower credit scores and less qualifying requirements making it easier for you and your family to purchase a home.
• Less than Perfect Credit – If you have been turned down by a convention lender do to past credit problems, such as bankruptcy, foreclosure or past credit issues it will be easier for you to qualify for an FHA loan than a conventional loan.
• Lower Down payment requirements- with FHA home loans homebuyers are required to have a low 3% down payment and that money can come from a family member, employer or charitable organization. No other program will allow this.
• Costs Less –Tine and time again you will find that FHA loans have lower rates for credit challenged borrowers. Because the loans are insured by the Federal Government lenders extend much better rates to FHA borrowers with less than perfect credit.
• Help You Keep Your Home - The FHA has been around since 1934 and will continue to be here to protect you when the others walk away. Should you encounter hard-times after buying your home, FHA has many options to help keep you in your home and avoid foreclosure.

FHA home loans come with many protections that only come with FHA. Did you know that in times of financial hardship you have a higher probability of not losing your home with an FHA home loan Vs. having a conational or subprime loan? Plus FHA loans are fully assumable adding one more layer of protection for you and your family.

History of FHA

The government established the (FHA) Federal Housing Administration mortgage program in 1934 to get people buying homes again.. Prior to 1934 if was very difficult to get a home loan, and down payment requirements were typically 50 percent of the home’s purchase price and payments were amortized only 1-5 years.

FHA loans began to lose traction in the 1990s as home values began to inch above the current FHA lending limit. Sellers were balking about strict FHA appraisal requirements.

Less repairs requirements

In the past FHA repair requirements were so excessive that sellers would discount the sale price to conventional home buyers rather than dealing with endless FHA repair requirements. Today the repair requirements are minimal mandatory repair requirements are minimal.

• Defective roofs that leak still need to be replaced but an older roof does not necessitate replacement if it doesn't leak.
• Windows that stick upon opening or have cracked panes do not require replacement.
• FHA appraisals do not take the place of a home inspection, never have. Buyers should still obtain a professional home inspection.