FHA Mortgage Loans

How do they work?
Recently the most common financing for first time home buyers is a FHA loan. With the demand for low down payment mortgages many borrowers are exploring this government resource. FHA loans are not limited to first time buyers.

FHA loans where instituted in 1937. Congress developed the Federal Housing Administration to provide homebuyers with a fair opportunity to become home owners. FHA loans are insured by the Housing and Urban Development commonly referred to as HUD. HUD-insured loans are available in urban and rural areas for single family homes and for 2-unit, 3-unit, and 4-unit properties

HUD insures mortgage loans to help people buy or refinance their current homes with a low down payment. HUD doesn't give you the loan directly. You'll need to go to a local HUD-approved lender, who will help you find out if one of HUD's programs is right for you. But, you can learn about HUD's mortgage insurance programs right here!

What are the benefits of an FHA Mortgage?
-Low down payment – as little as 3% down payment
-Down payment can be a gift from a family member
-Seller can pay up to 6% of sales price for closing costs
-No cash reserves are required
-FHA mortgages are assumable

FHA Mortgage Programs

FHA offer several programs for you to to choose from and they are not limited to just fixed rate mortgages. By selecting an FHA loan there are less strict underwriting guidelines that allows a borrower who normally would not qualify for a conventional mortgage receive funding.

In addition to a standard 30 yr fixed there are also 15 and 20 year fixed mortgages. One of the most overlooked program is the one year ARM The benefits of this loan is that it allows greater purchase power and allow you to qualify for a larger loan amount. Also unlike a conforming or non-conforming adjustable rate mortgage, if interest rates dramatically increase the maximum your interest rate can go up would only be 1% per year, no matter how high interest rates go.