What Are FHA Home Loans?


FHA home loans are mortgages that have been guaranteed by the Federal
Housing Administration. The FHA guarantee means that if the borrower
doesn't repay the lender, the government will. Since the guarantee
reduces the risk to lenders, these lenders may be willing to extend
mortgages to people who might not otherwise qualify for a loan.
When you apply for a loan guarantee from the Federal Housing
Administration (FHA), your total debt profile will be considered. The
total amount you can receive is determined by a ratio of your income
to your debt. If you owe too much to another lender, such as your
student lender, you will not be eligible for a loan. Even if you
qualify with an outstanding student debt, it will affect your limit.
BackgroundThe FHA insures mortgage loans; it does not make them
directly. With an FHA "guarantee," you can qualify for a lower down
payment and fixed interest rate. To qualify, however, you must have
good credit. Further, the FHA will not guarantee a loan you cannot
afford.
FunctionThe functio
Personal Finance
Seller financing refers to the ways that a seller can help a buyer
purchase a house. Sometimes buyers come very close to affording a home
and working out an agreement with the seller, but because of their
borrowing qualifications or low cash they still cannot afford the
house. In these case the seller can offer to make a loan of her own or
cover some of the costs associated with buying a house so that the
deal goes through and both sides profit. When it comes to FHA loans,
certain rules apply for this process. FHA FinancingFHA, or Federal
Housing Administration, mortgages act very much like conventional
loans, and many terms are still decided by the primary lender. But the
mortgage is sub
Personal Finance
The Federal Housing Administration (FHA) favors homeowners over
investors. A basic prerequisite for obtaining FHA insurance is that
the property securing the mortgage be the borrower's primary
residence, or owner-occupied. FHA does not insure investment
properties, as they pose a greater risk of default for the lender and
the government agency. In general, FHA will not insure a property the
borrower does not intend to occupy, but a person who owns more than
one property can still obtain FHA insurance under certain
circumstances. Guidelines for Principal ResidenceBorrowers who
already own real estate can still qualify for an FHA loan on a new
purchase if they meet certain owner-occupancy r
Personal Finance
The FHA manufactured home loan program offers assistance to home
buyers through a federal insurance program on private loans. By
securing an FHA home loan, mobile homeowners can secure lower
financing costs. BenefitsAll FHA secured loans are fixed rate. They
often offer lower interest rates compared to conventional mortgages,
and they also offer low down payment options. Qualified borrowers will
have opportunities to refinance their loans in the future if need be
through the FHA.
Financial RequirementsTo qualify, you must first
have sufficient money available for a down payment. You must also show
you have adequate income to make loan payments and meet other
financial obligations. You
Personal Finance
Private mortgage insurance (PMI) protects the lender against losses if
a borrower defaults on the loan. FHA mortgages prohibit lenders from
charging for PMI but impose other costs not included in conventional
mortgages. FunctionThe government prohibits lenders from charging
borrowers who have FHA mortgages for PMI because the loan is backed by
the government.
Upfront PremiumsFHA loans impose an upfront
mortgage insurance premium, paid to the government. As of 2010,
borrowers must pay a 2.25 percent upfront fee, which can be rolled
into the cost of the loan.
Monthly Insurance PremiumsMost FHA loans
carry monthly insurance premiums, which cost between 0.25 percent and
0.55 percent of
Personal Finance
The Federal Housing Administration has helped Americans obtain
affordable mortgages since its inception in 1934. FHA protects lenders
by reimbursing them in the event of homeowner default, making them
more willing to lend to people with less-than-perfect credit. It's an
agency within the Department of Housing and Urban Development (HUD)
which collects data, including average credit scores, for its
borrowers. The average FICO score for FHA refinances and purchases has
increased over the years. The BasicsFHA has a two-tier credit score
system for insuring loans. First-tier loans require a minimum down
payment of 3.5 percent, while second-tier loans require at least 10
percent. The first tie
Personal Finance
When it comes to home mortgages, the two most common types of
financing are FHA and VA loans. While both types are insured by the
government to protect financial institutions and investors from
losses, there are separate guidelines and qualifying information
applicable to each type of loan. The following information will
instruct home buyers on how to compare VA home loans to FHA loans in
the mortgage market. It also will aid in helping them make a decision
on which type of loan would be best when they are eligible for
both.Difficulty:ModerateInstructions Compare down payment
percentages. Using FHA loans, the current required minimum investment
on a home loan is 3 percent. VA loans, on th
Personal Finance

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