What is FHA?
The Federal Housing Administration, generally known as “FHA”, is a government funded agency that insures mortgage. 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.
What is FHA Mortgage Insurance?
FHA mortgage insurance provides lenders with protection against losses as the result of homeowners defaulting on their mortgage loans. Lenders are exposed to less risk because FHA will pay a claim to the lender in the event of a homeowner’s default. The administration has established certain requirements for loans to mean in order to qualify for the insurance.
Benefits of FHA?
The FHA loan’s combination of low rates, low downpayment, and flexible lending guidelines have made it one of the most common loan choices for home buyers today. Below you will find some of the benefits of choosing FHA.
- Downpayment: With an FHA mortgage, you can make a downpayment as small as 3.5%. It is permissible for your entire 3.5% downpayment to be a gift from parents or another relative, an employer, an approved charitable group, or a government homebuyer program.
- No SSN required: Not every home buyer will have a valid social security number and, according to the FHA, that’s okay. The FHA will also insure loans for non-permanent resident aliens.
- Competition among lenders: There Are Many FHA-Approved Lenders which makes the marketplace for FHA loans immense. This creates competitive pressure among lenders to offer low FHA rates and low FHA fees.
- There Are Many FHA Loan Products: The agency is best-known for its traditional 30-year fixed-rate mortgage, but they also offers a 15-year fixed rate loan as well as a series of adjustable-rate mortgages (ARMs).
- The FHA Insures All Property Types: They will insure single-family detached homes, 2-unit homes, 3-unit homes, 4-unit homes, condominiums, mobile homes and manufactured homes in any U.S. neighborhood or any U.S. territory.
- FHA Has Flexible Credit Standards: Of all the available loan types in today’s U.S. market, FHA loans are among the most forgiving with respect to credit standards. They do not require “perfect FICO score” and even encourages its approved lenders to look beyond isolated “credit events” and to consider a borrower’s complete credit history — regardless of credit score. Even borrowers with a recent foreclosure, short sale, deed-in-lieu or bankruptcy may be eligible for FHA financing.
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.
To see what interest rate you would qualify for, give us a call to set up an appointment with our preferred lender from Caliber Home Loans.
Real Estate Consultants
1 (844) 853-1113
5600 SW 135 Ave Suite #103
Miami, FL 33183