Do You Qualify For An FHA Mortgage? Find Out Here
An FHA loan is a mortgage that is backed by the Federal Housing Administration (FHA), and it is one of the easiest kinds of mortgages for which to qualify. The federal government insures mortgages for FHA-approved lenders so as to reduce their risk in case a borrower defaults on their mortgage. The FHA Loan program was developed after the housing crash in the Great Depression of the 1930’s. It was designed to provide lenders with enough insurance and to try to stimulate the housing market after the crash. Today, FHA loans are still very popular, especially with first time home borrowers.
FHA Mortgages – Key Elements
• Low down payment plans
• Come in a variety of loan terms
• Usually requires mortgage insurance
FHA Mortgage – Essential Features
• Available in a range of fixed rate loan plans
• Down payments as small as 3.5% of the loan
• You might be able to use a gift for the down payment and closing costs
• Usually have to pay monthly mortgage insurance premiums and upfront payment
FHA Mortgage – Essential Benefits
• Able to put less cash down upfront for the down payment and closing expenses
• Available to all income brackets
• A new buyer can take over the loan if you sell the home
• A co-applicant can help you qualify for the loan even if they don’t live with you.
FHA Mortgage – Disadvantages
• An FHA mortgage loan requires two kinds of mortgage insurance premiums. One is paid up front at the closing (or rolled into the mortgage); the other is paid monthly as part of the monthly mortgage payment. Also, the house must meet certain conditions and has to be appraised by an FHA-approved appraiser.
The FHA mortgage loan is a wonderful tool designed to allow home buyers to qualify without putting much money down. The downside is the mortgage insurance that must accompany the FHA loan monthly payments.